The government would most likely enact contractionary fiscal policy during _______.
A) an asset price bubble
B) economic recession
C) a long period of stagflation
D) None of these are an advantageous time to conduct contractionary fiscal policy.

Question

Quizplus · Accepted Answer

Contractionary fiscal policy, which involves reducing government spending or increasing taxes, is typically enacted during times of economic overheating or to curb an asset price bubble. This helps to prevent the economy from overheating further and can help to stabilize prices by slowing down economic growth.

The Government Would Most Likely Enact Contractionary Fiscal Policy During