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Arrange the steps to show the effects of contractionary fiscal policy.

1. Government increases the tax rate.
2. Consumers have less money to spend.
3. Producers manufacture fewer goods.
4. Inflationary pressure decreases.

Sagot :

GinnyAnswer

Final answer:

Contractionary fiscal policy is used to reduce inflationary pressure by increasing taxes and decreasing government spending, resulting in decreased consumer spending and production of goods.


Explanation:

Contractionary fiscal policy is implemented to reduce inflationary pressure in an economy. When this policy is enacted, the government can take actions such as increasing the tax rate and decreasing government spending. These measures lead to consumers having less money to spend, which in turn causes producers to manufacture fewer goods, ultimately decreasing inflationary pressures.


Learn more about Contractionary fiscal policy effects here:

https://brainly.com/question/29888187


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