Fiscal Policy That Decreases Aggregate Demand Is

question 48

Multiple Choice

Fiscal policy that decreases aggregate demand is:

• A) balanced.
• B) supplemental.
• C) contractionary.
• D) expansionary.

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Definitions:

Compensating Variation

A monetary measure of the amount of money a consumer would need to reach their original utility level after a price change.

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Utility Function

A mathematical expression that describes how the total satisfaction or happiness of a consumer changes with changes in consumption of goods and services.

Demand Function

A mathematical equation that describes the relationship between the quantity demanded of a good and its various determinants like price, income, and prices of related goods.