According to traditional Keynesian economics, contractionary fiscal policy initiated by the federal government

Question

Quizplus · Accepted Answer

Traditional Keynesian economics suggests that contractionary fiscal policy is appropriate during an over-heated economy to slow down rapid growth and prevent inflation. This is because the policy reduces the supply of money in the economy, which reduces aggregate demand and eventually slows down economic growth.

According to Traditional Keynesian Economics, Contractionary Fiscal Policy Initiated by the Federal