Contractionary Fiscal Policy Is So Named Because It

question 218

Multiple Choice

Contractionary fiscal policy is so named because it:

• A)involves a contraction of the nation's money supply.
• B)necessarily reduces the size of government.
• C)is aimed at reducing aggregate demand and thus achieving price stability.
• D)is expressly designed to contract real GDP.

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Definitions:

Elasticity Evidence

Data or information demonstrating the responsiveness of the quantity demanded or supplied of a good or service to changes in its price.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, opposite to a normal good.

Normal Good

A type of good for which demand increases as the income of individuals increases, indicating a direct relationship between income and demand.

Demand-Increasing Factor

Elements or conditions that lead to an increase in demand for a product or service, such as a rise in consumer income or a change in tastes.