Which of the following statements is true?
A) Countercyclical fiscal policy slows down the growth rate of an economy during an expansion by shifting the labor demand curve to the left.
B) Countercyclical fiscal policy slows down the growth rate of an economy during an expansion by shifting the labor supply curve to the right.
C) Countercyclical fiscal policy slows down the growth rate of an economy during an expansion by shifting the labor demand curve to the right.
D) Countercyclical fiscal policy slows down the growth rate of an economy during an expansion by shifting the labor supply curve to the left.

Question

Quizplus · Accepted Answer

Countercyclical fiscal policy aims to reduce the growth rate during economic expansions by decreasing demand (for example, through higher taxes or reduced government spending), which can be represented by shifting the labor demand curve to the left. This helps to cool down the economy and prevent overheating.

Which of the Following Statements Is True