The intent of contractionary ﬁscal policy is to
A) increase aggregate demand.
B) decrease aggregate demand.
C) increase aggregate supply.
D) decrease aggregate supply.

Question

Quizplus · Accepted Answer

Contractionary fiscal policy is aimed at reducing or slowing down the aggregate demand in an economy, typically through measures like increasing taxes, reducing government spending, or a combination of both. This is done to combat inflation or to stabilize an economy in the long run. Hence, the correct choice is B, which states that the intention of contractionary fiscal policy is to decrease aggregate demand.

The Intent of Contractionary ﬁScal Policy Is to