Contractionary fiscal policy
A) includes cuts in government spending and increases in taxes and is designed to slow down the economy.
B) reduces aggregate demand and shifts the aggregate demand curve inward
C) includes increases in government spending and decreases in taxes and is designed to stimulate the economy
D) Both "a" and "b"
Correct Answer:
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Q21: Use the graph to answer questions
Q22: Discretionary fiscal policy
A)does not require specific action
Q23: Federal policy changes that uses automatically changes
Q24: Use the graph to answer questions
Q25: Fiscal policy used to expand aggregate demand
Q27: Use the graph to answer questions
Q28: Use the graph to answer questions
Q29: A potential tradeoff for reducing pressure on
Q30: When expansionary fiscal policy is used to
Q31: A trade off for contractionary fiscal policy
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