reprhrase Expansionary fiscal policy is the use of fiscal policy to expand the economy by increasing aggregate demand, which leads to increased output, decreased unemployment, and a higher price level. Expansionary fiscal policy is used to fix recessions by the government such as increasing government spending or decreasing tax which in effect shifts the AD curve to the right (AD0 to AD1)which also increases GDP from Y0 to Y1. AD curve can still be shifted to the right (AD1 to AD2) via expansionary monetary policy which will also increase GDP from Y1 to Y2. Short run aggregate supply then increases upward when GDP reached its full potential or full employment which makes firm pay higher wages or cost which in effect pricing level becomes higher