Which of the following fiscal tax policies would be used to reduce inflation?

Question

(1 point)
• expansionary policy
• income tax policy ) contractionary policy
monetary policy

Answer 1

To reduce inflation, the appropriate fiscal tax policy would be contractionary policy.

Contractionary fiscal policy involves decreasing government spending or increasing taxes, which can help to decrease overall demand in the economy and, in turn, reduce inflationary pressures.

While monetary policy is also a tool used to combat inflation (by increasing interest rates), it is not a fiscal policy.