When the government decreases spending or increases taxes to slow economic expansion, the government is conducting:?

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Business

Van Hammond

28 April, 14:04

When the government decreases spending or increases taxes to slow economic expansion, the government is conducting:?

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Hayden Mathews · Answer 1

Contractionary Fiscal Policy

There are two methods used to control the economy one which is a monetary policy which has to do with the federal reserve and then there is a fiscal policy which certain parts of government have control of. So since the question states government is the one responsible we know that it has to be a type of fiscal policy. Because the economy is moving too fast and they may want to slow it down to prevent inflation or a future recession, they will use contractionary fiscal policy to slow down growth by increasing taxes or decreasing spending.