Which of the following fiscal tax policies would be used to reduce inflation?(1 point) Responses monetary policy monetary policy income tax policy income tax policy contractionary policy contractionary policy expansionary policy
The correct response is contractionary policy.
The fiscal tax policy that would be used to reduce inflation is contractionary policy.
To determine which fiscal tax policy would be used to reduce inflation, we need to understand the concepts of fiscal policy and inflation.
Fiscal policy refers to the government's use of taxation and spending to influence the overall economy. It can be expansionary, aiming to stimulate economic growth, or contractionary, aiming to slow down economic activity.
Inflation, on the other hand, refers to the sustained increase in the general price level of goods and services in an economy over time. When inflation is high, the purchasing power of money decreases, and it becomes more expensive to buy goods and services.
Out of the options you provided, the appropriate fiscal tax policy to reduce inflation would be contractionary policy. Contractionary fiscal policy involves reducing government spending and/or increasing taxes to decrease overall demand in the economy. By doing so, the government aims to lower aggregate demand and reduce inflationary pressures.
Therefore, the correct answer to your question is contractionary policy.