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On the other hand, A) fiscal policy could be used to slow the economy down by...

On the other hand, A) fiscal policy could be used to slow the economy down by shifting the AD curve to the B) . This would require that the government take in more in C) than it injected into the economy through government D) . The government would want to slow the economy down in order to fight E) . The result of this policy would be a budgetary F) .

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Answer #1

A) Contractionary fiscal policy could be used to slow the economy down by shifting the AD curve to the B) left . This would require that the government take in more C) money than it injected into the economy through government D) spending/purchases . The government would want to slow the economy down in order to fight E) demand pull inflation. The result of this policy would be a budgetary F) surplus

A reduction in spending by the government is know as fiscal contraction. It can depress aggregate demand when it reduces consumption and investment. It can lower the rate of inflation as well as that of GDP growth which increases surplus or reduce deficit of the government

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