Contractionary fiscal policy typically involves:

CA Foundation · Business Economics · PYQS · September 2025
Contractionary fiscal policy typically involves:
(A) A. Increasing government spending and reducing taxes.
(B) B. Reducing government spending and increasing taxes.
(C) C. Increasing government spending and increasing taxes.
(D) D. Reducing both government spending and taxes.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Reducing government spending and increasing taxes.

Topics: Public Finance

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