Which of the Following Is True Concerning Contractionary Fiscal Policy

question 37

Multiple Choice

Which of the following is true concerning contractionary fiscal policy?

• A)Contractionary fiscal policy is necessary to manipulate aggregate supply and maintain output.
• B)Contractionary fiscal policy results in recession.
• C)The purpose of contractionary fiscal policy is to slow down the economy by shifting the aggregate demand curve inward and removing pressure on price levels.
• D)Contractionary fiscal policy is appropriate when an output gap is being experienced.

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Definitions:

Realized Gain

The profit earned from the sale of an asset, which has been converted from an unrealized gain into cash or an equivalent.

Available-For-Sale

A classification for securities that are not held to maturity or for trading purposes, with unrealized gains or losses reported in equity.

Carrying Value

The stated value of an asset on a company's balance sheet, minus accumulated depreciation or amortization.