Explanation

Expansionary fiscal policy refers to government actions that aim to stimulate economic growth by increasing aggregate demand. This typically involves:

1. Increasing government spending
2. Decreasing taxes

Let's analyze each option:

A. public spending. - A cut in public spending is actually contractionary fiscal policy, as it reduces government expenditure and decreases aggregate demand.

B. personal income tax rates. - A cut in personal income tax rates is expansionary fiscal policy. When people pay less in taxes, they have more disposable income to spend, which increases consumption and aggregate demand.

C. reserve requirements for banks. - This is monetary policy, not fiscal policy. Reserve requirements are set by central banks (like the Federal Reserve) and affect how much money banks can lend. A cut in reserve requirements would be expansionary monetary policy, not fiscal policy.

Key Distinctions:

• Fiscal Policy: Government spending and taxation decisions made by the legislative and executive branches.
• Monetary Policy: Actions by central banks to control money supply and interest rates.

Therefore, only option B represents expansionary fiscal policy, as it involves tax cuts that increase disposable income and stimulate economic activity.