Answer Description (T / F) An expansionary fiscal policy increases aggregate demand and 1 increases real GDP. Crowing-out effect refers to the additional shifts in aggregate demand 2 curve that result when fiscal policy increases income and thereby decreases consumer spending. Saudi Arabia Monetary Agency (SAMA) can conduct an expansionary 3 monetary policy by lowering the reserve requirement. If the economy is going into a recession, an appropriate fiscal policy is to decrease government spending. A government budget deficit occurs when government expenditure is 5 more than government revenue