Contractionary fiscal policy would decrease the reserve requirement & slow down the economy. Contractionary monetary never works Contractionary monetary policy would increase government revenue & slow down the economy. Contractionary fiscal policy would lead to an increase in the national debt.

All aspects of Contractionary fiscal policy is discussed below in details.

Explanation:

Fiscal policy is a kind of fiscal policy that includes raising taxes, limiting government expenses, or both in order to fight inflationary stresses. Due to an improvement in taxes, families have less disposable earnings to spend. Lower disposal earnings reduce consumption. Examples of this include reducing taxes and increasing government spending.

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