Question
This opposite of expansionary fiscal policy is typically called contractionary fiscal policy. Economically, what is the most typical reason that a government would want to engage in contractionary fiscal policy?(1 point)
Responses
Since expansionary fiscal policy can cause tension with neighboring countries, a government might want to engage in contractionary fiscal policy to reduce that tension.
Since expansionary fiscal policy can cause tension with neighboring countries, a government might want to engage in contractionary fiscal policy to reduce that tension.
Since expansionary fiscal policy can restrict trade, a government might want to engage in contractionary fiscal policy to increase trade.
Since expansionary fiscal policy can restrict trade, a government might want to engage in contractionary fiscal policy to increase trade.
Since expansionary fiscal policy tends to be wildly unpopular with voters, a government might want to engage in contractionary fiscal policy to increase the administration's chances of holding onto governmental power.
Since expansionary fiscal policy tends to be wildly unpopular with voters, a government might want to engage in contractionary fiscal policy to increase the administration's chances of holding onto governmental power.
Since expansionary fiscal policy can cause inflation, a government might want to engage in contractionary fiscal policy to reduce inflation.
Responses
Since expansionary fiscal policy can cause tension with neighboring countries, a government might want to engage in contractionary fiscal policy to reduce that tension.
Since expansionary fiscal policy can cause tension with neighboring countries, a government might want to engage in contractionary fiscal policy to reduce that tension.
Since expansionary fiscal policy can restrict trade, a government might want to engage in contractionary fiscal policy to increase trade.
Since expansionary fiscal policy can restrict trade, a government might want to engage in contractionary fiscal policy to increase trade.
Since expansionary fiscal policy tends to be wildly unpopular with voters, a government might want to engage in contractionary fiscal policy to increase the administration's chances of holding onto governmental power.
Since expansionary fiscal policy tends to be wildly unpopular with voters, a government might want to engage in contractionary fiscal policy to increase the administration's chances of holding onto governmental power.
Since expansionary fiscal policy can cause inflation, a government might want to engage in contractionary fiscal policy to reduce inflation.
Answers
GPT-4o mini
The most typical reason that a government would want to engage in contractionary fiscal policy is:
**Since expansionary fiscal policy can cause inflation, a government might want to engage in contractionary fiscal policy to reduce inflation.**
Contractionary fiscal policy is often used to cool down an overheating economy, which can lead to inflation. By reducing government spending or increasing taxes, the government can help to decrease overall demand in the economy, thereby helping to control inflation.
**Since expansionary fiscal policy can cause inflation, a government might want to engage in contractionary fiscal policy to reduce inflation.**
Contractionary fiscal policy is often used to cool down an overheating economy, which can lead to inflation. By reducing government spending or increasing taxes, the government can help to decrease overall demand in the economy, thereby helping to control inflation.