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15 April, 19:13

When the government decreases spending or increases taxes to slow economic expansion, the government is conducting: a contractionary fiscal policy. b contractionary monetary policy. c expansionary fiscal policy. d expansionary monetary policy. e neither monetary policy nor fiscal policy.

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  1. 15 April, 20:49
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    The correct answer is option a.

    Explanation:

    Fiscal policy can be defined as a tool to make changes in the consumption and aggregate demand through government spending and tax revenue.

    A contractionary policy is used to reduce aggregate demand. A reduction in spending by the government or an increase in taxes is are tools for contractionary fiscal policy.
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