Government policy actions designed to reduce planned spending and output are called _____ policies.

Question

Government policy actions designed to reduce planned spending and output are called _____ policies.

A. aggregate

B. monetary

C. fiscal

D. expansionary

E. contractionary

Answer 1

Strictly speaking Government policy actions designed to reduce planned spending is Fiscal Policy. Monetary policy is administered by the central bank which is independent of Government (supposedly). A contractionary policy is designed to reduce planned spending and output. Therefore one of C or E is the answer. I would go with E contractionary because it describes the action of reducing spending. However, the question is pooly worded, because Govenment actions to reduce spending are Fiscal policy.

Answer 2

E. contractionary