The goal of contractionary fiscal policy is to shift the ________ curve to the ________.
A) aggregate demand; left
B) aggregate demand; right
C) short-run aggregate supply; right
D) short-run aggregate supply; left
E) long-run aggregate supply; left

Question

Quizplus · Accepted Answer

Contractionary fiscal policy aims to decrease aggregate demand and reduce inflationary pressures. This is achieved by decreasing government spending, increasing taxes, or a combination of both. As a result, the aggregate demand curve shifts to the left.

The Goal of Contractionary Fiscal Policy Is to Shift the ________