Question

Contractionary ________ policy contracts aggregate demand and contracts output by raising taxes, decreasing government purchases or some combination of the two.

Answer 1

Answer: Fiscal

Explanation:

Contradictory fiscal policy is the policy that contains the guideline for reducing government spending along with increment in taxes.This guidelines helps in eliminating inflation forces in expenditure.

Consequences of contradictory fiscal policy after getting implementation are reduced disposal income in household activities due to which consumption of household becomes low.