Question

Contractionary fiscal policy is used to __________.

Answer 1

Answer: B.  decrease the amount of money in the economy

Explanation:

Contractionary fiscal policy is action taken by the government to reduce th amount of money in the economy. It is usually done when the government thinks the economy is producing more than it should be and so therefore inflation is reaching unsustainable levels.

Contractionary policy entails the government reducing its spending and/or increasing taxes so that people have less money to spend on goods and services.