Tightening fiscal policy during a recession is likely to _______ equilibrium real GDP.

Name: Tightening fiscal policy during a recession is likely to _______ equilibrium real GDP.
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Question

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Tightening fiscal policy, which involves reducing government spending or increasing taxes, typically reduces aggregate demand. This, in turn, can lead to a decrease in equilibrium real GDP, especially during a recession when the economy is already underperforming.

Tightening Fiscal Policy During a Recession Is Likely to _______