Which Best Explains How Contractionary Policies Can Hamper Economic Growth?
a. aggregate demand increases
b. consumer debt increases
c. consumer confidence decreases
d. disposable income decreases
The correct answer is option D) Disposable income decreases
Fiscal policy can be explained as a process of means that assists the government of a country to adjust the level of spending and tax rates that can influence a country’s economy.
Fiscal policy controls the central bank of a nation that controls and influences a country’s money supply. Fiscal policy influences aggregate demand by transfer of payment and taxation.