A Contractionary Fiscal Policy Is Likely to

question 125

Multiple Choice

A contractionary fiscal policy is likely to

• A) reduce a government budget deficit and reduce borrowing by the Treasury.
• B) increase a government budget deficit and increase borrowing by the Treasury.
• C) reduce a government budget deficit and increase borrowing by the Treasury.
• D) increase a government budget deficit and reduce borrowing by the Treasury.

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Definitions:

Government Grant

Financial support provided by the government to individuals, organizations, or businesses for specific projects or purposes, often not requiring repayment.

Indirect Benefits

Advantages or positive effects that are not directly linked to the initial action or investment, often realized over time or through secondary channels.

Job Creation

The process of providing new employment opportunities, often seen as a critical aspect of economic growth and development.

State Investment

Financial contributions or assets placed by government entities into projects, companies, or other ventures to stimulate economic growth or achieve policy objectives.