Contractionary policies are government stabilization policy actions intended to decrease:
A) population.
B) unemployment.
C) average labor productivity.
D) planned spending.

Question

Quizplus · Accepted Answer

Contractionary policies are aimed at reducing the total spending in the economy, and thus decrease the planned spending. This is done through measures such as increasing taxes, reducing government spending, and raising interest rates to discourage borrowing and spending. The goal is to slow down economic growth to control inflation or reduce a trade deficit.

Contractionary Policies Are Government Stabilization Policy Actions Intended to Decrease