A situation when the government most likely have a contractionary fiscal policy is D. when the level of economic output is running unusually high.
<h3>What is contractionary fiscal policy?</h3>
Contractionary fiscal policy is when the government collects more money than it spends. This is usually done by increasing taxes and reducing government expenditure.
During a recession, unemployment will <u>increase</u> tax revenue collected by the government will <u>decrease</u>, and spending by the government will <u>increase</u>.
According to the new classical critique of fiscal policy, consumers increase their savings in response to government spending because they believe they will eventually need the saved money when they have to pay higher taxes.
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If you get confused by logarithms, here's an easier way to think about this problem: What power of 2 equals 128? Well, we know 2^3 = 8, then 2^4 must equal 16. Doubling every times, we get 2^5 = 32, 2^6 = 64 and 2^7 = 128. So, the value of log₂128 is 7.
The answer is 0o45.......
