Why is contractionary fiscal policy often not used by the federal government?(1 point) Responses Decreases in federal government revenue and increasing expenses cause large deficits and adds to the national debt, which put a strain on the 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. Individual and corporate tax rates increase while spending for social programs decreases, both of which would lead the economy to slow down or contract. 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. The increase in individual and corporate tax rates as well as government spending cause a slow down in the private sector economy. The increased individual and corporate income taxes overheats the economy and increases inflation.

Answer 1

The most appropriate response to why contractionary fiscal policy is often not used by the federal government is:

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

This response captures the essential concern that contractionary fiscal policy—characterized by increased taxes and reduced government spending—can negatively impact economic growth and may lead to a recession, which is something governments generally want to avoid.