arrange the steps to show the effects of contractionary fiscal policy. inflationary pressure decreases…

arrange the steps to show the effects of contractionary fiscal policy. inflationary pressure decreases. government increases the tax rate. producers manufacture fewer goods. consumers have less money to spend.

arrange the steps to show the effects of contractionary fiscal policy. inflationary pressure decreases. government increases the tax rate. producers manufacture fewer goods. consumers have less money to spend.

Answer

Brief Explanations:

Contractionary fiscal policy starts with the government increasing the tax rate. This leads to consumers having less money to spend. With lower consumer demand, producers manufacture fewer goods. As a result, inflationary pressure decreases.

Answer:

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