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To explain:
The reason for government actions increasing deficits is considered expansionary fiscal policy and government actions decreasing deficits is considered contractionary policy.
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Explanation of Solution
Fiscal policy is similar to the
The fiscal government actions that decrease the deficits are considered as contractionary fiscal policy. This is because a decrease in deficit reduces the money supply, which decreases the
Fiscal policy:
That means in economics through which a federal government keeps a check and adjusts its expenditure level and tax rates, or duty charge is referred as fiscal policy. This policy helps to monitor and guide the country's economic situation.
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Chapter 16 Solutions
Exploring Macroeconomics
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