Question

Arrange the steps to show the effects of contractionary fiscal policy. Tiles Inflationary pressure decreases. Government increases the tax rate. Producers manufacture fewer goods. Consumers have less money to spend. Sequence ↓ ↓ ↓

Answer 1

Government increases the tax rate.
Consumers have less money to spend.
Producers manufacture fewer goods.
Inflationary pressure decreases.

Answer 2

Arrange the steps to show the effects of contractionary fiscal policy.

1. Government increases the tax rate.

2. Consumers have less money to spend.

3. Producers manufacture fewer goods.

4. Inflationary pressure decreases.