Contractionary policies are policies designed to
A) increase the level of real GDP.
B) reduce the level of real GDP.
C) increase government spending.
D) increase the federal deficit.

Question

Quizplus · Accepted Answer

Contractionary policies are designed to decrease the level of real GDP. This is typically done by reducing government spending, increasing taxes, or decreasing the money supply. These policies are used when inflation is a concern or when the economy is in a boom phase and needs to be slowed down.

Contractionary Policies Are Policies Designed to