Which Type of Fiscal Policy Involves Reducing Government Spending, Reducing

question 223

Multiple Choice

Which type of fiscal policy involves reducing government spending, reducing transfer payments, or raising taxes to decrease aggregate demand?

• A) expansionary fiscal policy
• B) contractionary fiscal policy
• C) diminishment fiscal policy
• D) reductionist fiscal policy

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Definitions:

Zero-Coupon Bond

A debt security that doesn't pay periodic interest, sold at a discount from its face value, and repays the face value at maturity.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, considering both the interest payments and the capital gain or loss.

Market Price

The price at which an asset or service is traded in the open market.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, representing a form of borrowing by the government.