A) expansionary ﬁscal policy.
B) a major recession.
C) contractionary ﬁscal policy.
D) demand-pull inﬂation.

Question

A) expansionary ﬁscal policy. 
B) a major recession. 
C) contractionary ﬁscal policy. 
D) demand-pull inﬂation.

Quizplus · Accepted Answer

Contractionary fiscal policy is when the government decreases spending or increases taxes in order to decrease aggregate demand and prevent inflation. The image file name, "TB8601_00," does not provide any clear indication of a major recession or demand-pull inflation, but suggests a possible need for contractionary fiscal policy.

A) Expansionary ﬁScal Policy