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5 August, 13:48

1. Why is the slow growth that can result from a contractionary policy a positive effect?.

A. It can increase interest rates ...

B. It can decrease available credit ...

C. It can increase the money supply ...

D. It can decrease inflation ...

2. If expansionary taxation policies are left unchecked, which is the most likely result?.

A. reduced profits.

B. reduced government spending.

C. reduced production.

D. reduced disposable income.

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Answers (1)
  1. 5 August, 17:25
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    1. I believe the answer is: D. It can decrease inflation

    The main purpose of a contractionary policy is to reduce the inflation in a country. In order to do this, they need to decrease the money in the market so their currency value would rise compared to other currency that exist in local market.

    2. I believe the answer is: D. Reduced Disposable income

    When expansionary policies left unchecked, government budget would keep be allocated to buy various form of infrastructurs. Because of this, Disposable income that could be used for welfare and other programs would be reduced.
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