Fiscal restraint:
A) Is used to reduce a recession.
B) Causes a rightward shift of aggregate demand.
C) Causes a rightward shift of aggregate supply.
D) Includes tax hikes and spending cuts.

Question

Quizplus · Accepted Answer

Fiscal restraint refers to measures taken by the government to reduce its budget deficit by cutting government spending and/or increasing taxes. Therefore, the correct choice is (D) which includes tax hikes and spending cuts.

Fiscal Restraint