Mistimed contractionary fiscal policy can cause:
A) a real shock.
B) rising interest rates.
C) a recession.
D) inflation.

Name: Mistimed contractionary fiscal policy can cause: A) a real shock. B) rising interest rates. C) a recession. D) inflation.
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Question

Quizplus · Accepted Answer

Mistimed contractionary fiscal policy, such as a sudden decrease in government spending and/or an increase in taxes, can lead to a decrease in aggregate demand and a contraction in the economy, potentially causing a recession.

Mistimed Contractionary Fiscal Policy Can Cause