The Congress lowered taxes to aid in the recovery of a recession. This is an example of _____ .

Lowering taxes during a recession is an example of expansionary fiscal policy because it aims to increase overall demand in the economy. By reducing taxes, individuals and businesses have more disposable income, which can lead to increased consumer spending and investment. This increase in demand can help stimulate economic growth and combat the negative effects of a recession.

Expansionary fiscal policy typically involves government actions, such as increasing public spending or cutting taxes, to encourage more economic activity. The goal is to inject money into the economy, making it easier for people and businesses to spend and invest, which can help speed up the recovery process in times of economic downturn.

In contrast, contractionary fiscal policy would involve raising taxes or cutting government spending to reduce inflation or a budget deficit, which is not the case here. Expansionary monetary policy refers to actions taken by a central bank, like lowering interest rates or increasing money supply, rather than fiscal measures such as tax cuts. Therefore, the correct answer reflects the objective of increasing economic activity through tax reduction in a recessionary context.