Example of expansionary-contractionary fiscal policy

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Reference no: EM131092357

Aspects of fiscal policy Suppose the economy had been producing at natural real GDP but is now experiencing a recession. Which of the following are discretionary fiscal policies that could bring the economy closer to natural real GDP? Check all that apply.

A reduction in government purchases

A tax cut Additional spending on national park facilities

A tax hike

In the preceding scenario, is the discretionary fiscal policy needed to bring the economy closer to natural real GDP an example of expansionary fiscal policy or contractionary fiscal policy?

Expansionary

Contractionary

Reference no: EM131092357

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