What is one benefit of contractionary fiscal policy for consumers?(1 point)ResponsesContractionary fiscal policy decreases tax rates.Contractionary fiscal policy decreases tax rates.Contractionary fiscal policy reduces take-home pay.Contractionary fiscal policy reduces take-home pay.Contractionary fiscal policy slows the rate of inflation.Contractionary fiscal policy slows the rate of inflation.Contractionary fiscal policy increases government spending on public works.Contractionary fiscal policy increases government spending on public works.
The benefit of contractionary fiscal policy for consumers is that it slows the rate of inflation.
The correct response is:
Contractionary fiscal policy slows the rate of inflation.
By reducing government spending and increasing taxes, contractionary fiscal policy helps to control inflationary pressure in the economy. This can benefit consumers by preventing rapid increases in the cost of goods and services, thus maintaining the purchasing power of their income.
The correct answer is: Contractionary fiscal policy slows the rate of inflation.
To understand why this is the correct answer, let's break down the options given:
1. Contractionary fiscal policy decreases tax rates.
While decreasing tax rates can benefit consumers by potentially increasing their disposable income, it does not directly address the question of how it benefits them in terms of inflation.
2. Contractionary fiscal policy reduces take-home pay.
This option suggests that consumers would receive less income, which is not a benefit for them.
3. Contractionary fiscal policy slows the rate of inflation.
This option directly addresses the question. Contractionary fiscal policy typically involves measures to reduce government spending and/or increase taxes, which can help slow down inflation. When inflation is lower, the prices of goods and services tend to rise at a slower pace, making it more affordable for consumers to make purchases.
4. Contractionary fiscal policy increases government spending on public works.
Increasing government spending on public works is not a direct benefit for individual consumers in terms of inflation.
Therefore, the correct answer is that one benefit of contractionary fiscal policy for consumers is that it slows the rate of inflation.