The government can enact contractionary fiscal policy by:

Question

Quizplus · Accepted Answer

Contractionary fiscal policy is implemented to reduce inflationary pressures in the economy by decreasing aggregate demand. One way to do this is by reducing the government's spending, which decreases the amount of money flowing into the economy. Decreasing personal or corporate income taxes, on the other hand, would increase disposable income and therefore aggregate demand, making these options expansionary fiscal policies.

The Government Can Enact Contractionary Fiscal Policy By