A contractionary fiscal policy either _____ government spending or _____ taxes.
A) increases; increases
B) decreases; increases
C) increases; decreases
D) decreases; decreases

Question

Quizplus · Accepted Answer

A contractionary fiscal policy is designed to decrease aggregate demand and slow down economic growth. This can be done by either decreasing government spending or increasing taxes, which reduces disposable income for consumers and decreases business investment. Therefore, choice B (decreasing government spending and increasing taxes) is the correct answer.

A Contractionary Fiscal Policy Either _____ Government Spending or _____

A Contractionary Fiscal Policy Either _ Government Spending or _