ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Physically Destroying Money
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Raising Taxes
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Cutting Government Spending
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None of the above
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Detailed explanation-1: -Contractionary fiscal policy includes raising taxes, decreasing spending, or a combination of the two. These actions reduce an economy’s aggregate demand. Businesses slow production as their inventories increase. They may lay off workers or have their workers work fewer hours to produce less.
Detailed explanation-2: -Answer and Explanation: The correct option is: b) Cutting spending on the military.
Detailed explanation-3: -Contractionary fiscal policy is used to slow economic growth, such as when inflation is growing too rapidly. The opposite of expansionary fiscal policy, contractionary fiscal policy raises taxes to cut spending. As consumers pay more taxes, they have less money to spend, and economic stimulation and growth slow.
Detailed explanation-4: -There are three types of fiscal policy. They are neutral policy, expansionary policy, and contractionary policy.