Question

A fiscal policy that is designed to slow the rate of economic growth will, ceteris paribus: increase aggregate demand. increase the rate of inflation. decrease long-run aggregate supply. decrease aggregate demand.

Answer 1

Answer:

Increase aggregate demand.

Explanation:

A fiscal policy that is designed to slow the rate of economic growth will, ceteris paribus increase aggregate demand. This policy is also known as the contractionary policy.

The basic function of this policy is to slow the economic growth and basically try to flatten out the rate of inflation. It also effects the aggregate demand, the graph of which shifts to the right, meaning triggering an increase. This is done because the long term effects of inflation can effect the standard of living as recession would.