Expansionary fiscal policy is a way the government can help the economy grow. It usually involves spending more money or cutting taxes. This can help people, but it might also cause prices to go up. Let’s break it down:

• Increased Demand: When people have more money, they tend to buy more things. For example, if the government pays for building new roads, the workers and suppliers involved earn more money. This means they can spend more, which helps the economy.

• Demand-Pull Inflation: When more people want to buy things, prices can rise. Think about a popular concert with only a few tickets. If a lot of people want to go, the ticket prices will jump up.

• Multiplier Effect: Government spending can have a bigger impact than just what you see at first. If a new school opens, it helps not only the construction workers who built it but also local shops and restaurants. This can lead to local prices going up more.

In short, expansionary fiscal policy can help improve the economy, but it can also lead to higher prices for things we buy.