Multiple choice

Which of the following is a contractionary fiscal policy?

  1. Increasing the taxes

  2. Repaying public debt

  3. Decreasing transfer payments

  4. Adopting seigniorage policy
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

It is a contractory fiscal policy. When the public debt borrowed from public is redeemed or repaid back to public, the revenue in the hands of government will decrease. Thus, that policy by which the money, funds or revenue in the hands of government decreases is contractory fiscal policy.

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