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Contractionary fiscal policy is described as shifting aggregate demand in which direction?

AUpward
BNowhere
CInward
DOutward
Answer & Solution
Correct answer: C. Inward
1. The two policy directions move the curve opposite ways. 2. Expansionary fiscal policy shifts aggregate demand outward. 3. Fiscal policy shifts it inward in the case of contractionary fiscal policy. 4. Both work through changes in spending or taxes. _Source: OpenStax Principles of Macroeconomics for AP Courses 2e (CC BY 4.0), Ch 16 'Government Budgets and Fiscal Policy'_
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