alleryStart learning →When is contractionary fiscal policy typically employed?
ADuring mass unemployment
BDuring a liquidity trap
CDuring an inflationary boom
DDuring a deep recession
Answer & Solution
Correct answer: C. During an inflationary boom
It is used when unsustainable growth is pushing up inflation and prices.
Keep practising Public Finance
Browse all Public Finance questions for CA Foundation, or explore more Business Economics topics.
Related questions
The free rider problem assumes people are modelled as what?In a progressive tax system, higher earners pay what?What did Pigou recommend to curb over-production causing external harm?Why does Coasean bargaining fail for a polluting steel factory?Whose theorem says private bargaining can fix externalities?The Coase theorem needs which condition on transaction costs?Taxing producers so prices reflect full costs is called what?With positive externalities, output of the good tends to be what?