Which are contractionary fiscal policies?

Question

Quizplus · Accepted Answer

Contractionary fiscal policies are those which aim to decrease aggregate demand and curb inflationary pressures in an economy. Increasing taxation and decreasing government spending both serve to reduce the amount of money available to consumers and limit the amount of government spending in the economy, which can decrease demand for goods and services and reduce overall economic activity. Option A (increased taxation and increased government spending) is expansionary fiscal policy, option C (decreased taxation and no change in government spending) is neutral fiscal policy, and option D (no change in taxation and increased government spending) is also expansionary fiscal policy.

Which Are Contractionary Fiscal Policies