What does an expansionary budget stance imply?

An expansionary budget stance implies that the government is actively looking to stimulate economic activity. This approach often involves increasing government spending and/or decreasing taxes, which can lead to greater consumer demand and investment. By implementing these measures, the government aims to boost economic growth, especially during periods of recession or slow economic performance.

Choosing an expansionary stance is typically driven by the need to combat unemployment or to enhance overall economic stability. It contrasts with a contractionary budget approach, where the government would take steps to reduce spending or increase taxes, focusing instead on reducing economic activity, often to control inflation or reduce budget deficits. Thus, an expansionary budget stance is intrinsically about promoting and increasing economic activity, justifying why the correct answer is that the government plans to increase economic activity.