Question

g If the economy experiences economic contraction, the government can combat this with an Group of answer choices increase in government purchases increase in marginal tax rates increase in autonomous taxes increase in real interest rates

Answer 1

increase in government purchases

Step-by-step explanation:

If there is a contraction in the economy, the government should conduct expansionary policies to increase money supply.

Discretionary fiscal policies are deliberate steps taken by the government to stimulate the economy in order to cause the economy to move to full employment and price stability more quickly than it might otherwise.

Discretionary fiscal policies can either be expansionary or contractionary

Expansionary fiscal policy is when the government increases the money supply in the economy either by increasing spending or cutting taxes.

Contractionary fiscal policies is when the government reduces the money supply in the economy either by reducing spending or increasing taxes