When Congress raises taxes, it also slows growth. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. Which of the following is an example of discretionary fiscal policy? Contractionary Fiscal Policy . The tools of contractionary fiscal policy are used in reverse. How does fiscal policy affect the inequality of incomes? Fiscal policy, measures employed by governments to stabilize the economy, specifically by manipulating the levels and allocations of taxes and government expenditures. It slows economic growth. A. a tax cut passed by Congress to fight a recession B. income tax receipts increasing during an expansion due to rising incomes C. unemployment insurance payments increasing during a recession D. economic expansion causing a decrease in the number of food stamps issued Expansionary fiscal policy occurs when the Congress acts to cut tax rates or increase government spending, shifting the aggregate demand curve to the right. Republican cause sequester of the government contracted fiscal spending by shutting down all non essential government functions, thus slowing the economy and exacerbating the ill effects of the Great Recession. Fiscal policy, for instance, is commendably tight; t Learn more about fiscal policy in this article. Which of the following is an example of crowding out? An example of government spending as expansionary fiscal policy is the American Recovery and Reinvestment Act of 2009. contractionary fiscal policy Discretionary fiscal policy _____ is the deliberate manipulation of government purchases, transfer payments, and taxes to promote macroeconomic goals. 4. A transfer payment _____ flows from government to households. Why does discretionary fiscal policy often fail? That then reduces job growth. In other words, it represents the tools that the government can use to help stabilize the economy and smooth out bubbles and upswings where inflation is more likely. The second type of fiscal policy is contractionary fiscal policy, which is rarely used. Its goal is to slow economic growth and stamp out inflation. 75+1 sentence examples: 1. The long-term impact of inflation can damage the standard of living as much as a recession. Contractionary fiscal policy is when the government cuts spending or raises taxes. 3. Expansionary fiscal policy actions include _____ government spending and/or _____ taxes, while contractionary fiscal policy actions include _____ government spending and/or _____ taxes. Definition: Contractionary fiscal policy is an economic method that governments and central banks use to reduce the money supply in the economy to combat inflation. A spending cut means less money goes toward government contractors and employees. The increase of taxation is an important fiscal policy. 2. Generally speaking contractionary monetary policies and expansionary monetary policies involve changing the level of the money supply in a country. 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