Which of the following is true concerning contractionary fiscal policy?
A) Contractionary fiscal policy is necessary to manipulate aggregate supply and maintain output.
B) Contractionary fiscal policy results in recession.
C) The purpose of contractionary fiscal policy is to slow down the economy by shifting the aggregate demand curve inward and removing pressure on price levels.
D) Contractionary fiscal policy is appropriate when an output gap is being experienced.
Correct Answer:
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