Question

Why is contractionary fiscal policy often not used by the federal government?(1 point)

The increased individual and corporate income taxes overheats the economy and increases inflation.

Individual and corporate tax rates increase while spending for social programs decreases, both of which would lead the economy to slow down or contract.

The increase in individual and corporate tax rates as well as government spending cause a slow down in the private sector economy.

Decreases in federal government revenue and increasing expenses cause large deficits and adds to the national debt, which put a strain on the economy.

Answer 1

Individual and corporate tax rates increase while spending for social programs decreases, both of which would lead the economy to slow down or contract.