Under an expansionary taxation policy, the government tries to stimulate economic growth by increasing taxes. reducing taxes. increasing spending. reducing spending.

Reducing taxes.

Under an expansionary taxation policy, the government tries to stimulate economic growth by reducing taxes.

Explanation:  

Expansionary policy refers to a form of monetary policy in which the government spends more or taxes less. The government expands the money supply faster than usual or lower / reduces the short-term interest rates. It is usually enacted by central banks because it is a powerful tool.

Taxes are compulsory levies imposed by the government on individuals in the country. Taxes are used to raise revenue for government expenditure and also for provision of infrastructures such as good roads, electricity, education, good sewage system and so on.

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