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Answered

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Contractionary fiscal policy increases spending while expansionary fiscal policy decreases spending
A. True
B. False

Sagot :

Answer:

False

Explanation:

contractionary fiscal policy is aimed to fight inflationary pressures. The government tries to decrease the demand of goods consumed by the household by increasing taxes, decreasing spending and trying to create a surplus budget.

expansionary fiscal policy are aimed to increase the aggregate demand which in turn increases output and employment in the economy. Government increases its spending and decreases taxes which increases demand and shifts aggregate demand curve to right.

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