SIE Exam Question 917: Answer and Explanation

Question: 917

Contractionary policy is characterized by which of the following?

• A. Increasing government borrowing
• B. Increasing public spending
• C. Increasing taxes
• D. All of the above are correct.

Correct Answer: C

Explanation:

Contractionary policy is characterized by increasing taxes, decreasing government borrowing, and decreasing public spending.