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Which of the following is an example of a contractionary fiscal policy?
An increase in the economy's price level
An increase in government spending
O An increase in the income tax rates
An increase in transfer payments
OA new subsidy for certain business production



Answer :

GinnyAnswer
The example of a contractionary fiscal policy among the options provided is: - An increase in the income tax rates When the government increases income tax rates, it reduces the disposable income of individuals and businesses. This reduction in disposable income leads to lower spending and investment, which in turn helps to control inflation and slow down economic growth. By implementing this policy, the government aims to decrease the overall demand in the economy, which can help to combat inflationary pressures.

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