Which of the following is an example of contractionary fiscal policy?
A)Cutting spending
B)Reducing taxes
C)Increasing spending
D)None of these

Question

Quizplus · Accepted Answer

Contractionary fiscal policy means reducing government spending and/or increasing taxes to slow down economic growth and control inflation. Cutting spending is an example of contractionary fiscal policy. Reducing taxes, as mentioned in choice B, is an example of expansionary fiscal policy. Increasing spending, as mentioned in choice C, is also an example of expansionary fiscal policy. Therefore, the correct answer is A – Cutting spending.

Which of the Following Is an Example of Contractionary Fiscal