Which of the following fiscal tax policies would be used to reduce inflation?(1 point) Responses expansionary policy expansionary policy income tax policy income tax policy contractionary policy contractionary policy monetary policy
The correct answer is contractionary policy.
The correct answer is "contractionary policy."
To determine which fiscal tax policy would be used to reduce inflation, we need to understand the concepts of expansionary and contractionary policies.
Expansionary fiscal policy aims to stimulate economic growth by increasing government spending and reducing taxes. This policy is typically used during periods of recession or economic slowdown. It can help boost consumer spending, business investment, and overall economic activity.
Contrarily, contractionary fiscal policy aims to slow down economic growth and reduce inflationary pressures by decreasing government spending and increasing taxes. This policy is implemented when the economy is overheating, and inflation rates are rising.
Given the options provided, the fiscal tax policy that would be used to reduce inflation is the contractionary policy. By increasing taxes, the government reduces the amount of disposable income individuals and businesses have to spend. This decrease in spending can help curtail inflationary pressures by lowering demand and limiting price increases.
Therefore, the correct answer is: contractionary policy.