What is likely the result of expansionary fiscal policy?

Expansionary fiscal policy involves government actions aimed at stimulating economic growth, usually through increased public spending or tax cuts. When a government adopts this policy, it often leads to a budget deficit because the increased spending typically surpasses the revenue generated from taxes.

By injecting more money into the economy—whether it's through infrastructure projects, social programs, or other forms of government spending—the government aims to boost aggregate demand. While this can lead to economic growth, it also means that the immediate result is often a situation where the government is spending more than it is earning, hence creating a deficit.

In contrast, options such as budget surplus or balanced budget are unlikely outcomes of expansionary fiscal policy, as they imply a stronger financial position for the government, which would not align with the intent of stimulating the economy through increased expenditures. Increased taxation would also not be a direct result; expansionary fiscal policy typically involves reducing taxes to spur consumer spending, rather than raising them. Thus, the resulting scenario from expansionary fiscal measures is a budget deficit.