GENERAL KNOWLEDGE

Detailed explanation-1: -Contractionary fiscal policy: In contractionary fiscal policy, the government taxes more than it spends-either by increasing tax rates, decreasing spending, or both. This type of fiscal policy is best used during times of economic prosperity. Contractionary fiscal policy is the opposite of expansionary fiscal policy.

Detailed explanation-2: -The government can use contractionary fiscal policy to slow economic activity by decreasing government spending, increasing tax revenue, or a combination of the two. Decreasing government spending tends to slow economic activity as the government purchases fewer goods and services from the private sector.

Detailed explanation-3: -Contractionary fiscal policies typically slow economic growth. Reducing government spending slows an economy, as does increasing tax revenue. However, contractionary fiscal policy is typically used to slow an economy that is growing quickly.

Detailed explanation-4: -Contractionary fiscal policies are measures governments take to reduce their spending and increase taxes, leading to a decrease in economic growth. This course of action results in a lower standard of living for consumers and businesses.

Detailed explanation-5: -contractionary fiscal policy the use of fiscal policy to contract the economy by decreasing aggregate demand, which will lead to lower output, higher unemployment, and a lower price level. Contractionary fiscal policy is used to fix booms.