Question

An example of contractionary (taking money away from the general population) fiscal policy would be :

A) cutting taxes.
B) decreasing government spending.
C) increasing production of consumer goods.
D) expanding the government’s role in regulating private industry.

Answer 1

Contractionary fiscal policy refers to tax increases or cuts in government spending to decrease aggregate demand and reduce inflation. An example of this policy is decreasing government spending.

Step-by-step explanation:

Contractionary fiscal policy refers to tax increases or cuts in government spending designed to decrease aggregate demand and reduce inflationary pressures. One example of contractionary fiscal policy would be decreasing government spending. By reducing government expenditures, the policy aims to lower the level of aggregate demand in the economy. This can help combat inflation by reducing the amount of money circulating in the economy.

Answer 2

I think the correct answer from the choices listed above is option B. An example of contractionary (taking money away from the general population) fiscal policy would be decreasing government spending. It is a form of fiscal policy that involves increasing taxes, decreasing government expenditures or both.