Which of the following is an example of contractionary fiscal policy? a) reducing military spending b) building a new interstate highway c) none of the other answers are correct d) increasing federal spending to renovate college campuses e) sending taxpayers a $600 rebate.

a) reducing military spending

Explanation:

Contractionary fiscal policy is when the government reduces spending or increases taxes to reduce money supply, remedy a budget deficit or increase a surplus.

Contractionary fiscal policy can be used to combat inflation.

Reducing the military spending is a contractionary fiscal policy because it reduces money supply.

Building a new interstate highway, increasing federal spending to renovate college campuses and sending taxpayers a $600 rebate are expansionary fiscal policy because it increases government spending and the money supply.