Answer :
Final answer:
Expansionary fiscal policy has the most immediate impact on the economy. Tax cuts for public servants are expansionary, while selling treasury bills is a monetary policy that could be restrictive. Broadening the tax base involves increasing the number of taxpayers who contribute to the tax system.
Explanation:
Expansionary fiscal policy has the most immediate effect on the economy as it involves increasing government spending or reducing tax rates to boost aggregate demand quickly.
Regarding the provided scenarios:
- a) Tax cuts for public servants are expansionary as they increase disposable income, leading to higher spending.
- b) Selling treasury bills is a monetary policy and can be restrictive if it reduces money supply, impacting spending negatively.
'Spreading or broadening the tax base' means increasing the number or range of taxpayers contributing to the tax system, distributing the tax burden across a wider population for revenue generation.
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