Asked by Shay
Which of the following fiscal tax policies would be used to reduce inflation?
A) income tax policy
B) contractionary policy
C) monetary policy
D) expansionary policy
A) income tax policy
B) contractionary policy
C) monetary policy
D) expansionary policy
Answers
GPT-4o mini
To reduce inflation, the most appropriate choice among the provided options is:
**B) contractionary policy**
Contractionary fiscal policy typically involves reducing government spending and/or increasing taxes, which can help decrease overall demand in the economy and thus reduce inflationary pressures. While monetary policy (option C) is primarily used to control inflation through interest rates, it is not classified as a fiscal tax policy.
**B) contractionary policy**
Contractionary fiscal policy typically involves reducing government spending and/or increasing taxes, which can help decrease overall demand in the economy and thus reduce inflationary pressures. While monetary policy (option C) is primarily used to control inflation through interest rates, it is not classified as a fiscal tax policy.