- CFA Exams
- CFA Exam: Level I 2021
- Study Session 5. Economics (2)
- Reading 16. Monetary and Fiscal Policy
- Subject 8. Active and Discretionary Fiscal Policy
CFA Practice Question
The primary purpose of a contractionary fiscal policy is to ______
B. reduce unemployment.
C. increase equilibrium income.
A. reduce inflationary pressure.
B. reduce unemployment.
C. increase equilibrium income.
Correct Answer: A
Contractionary fiscal policy reduces aggregate demand in an attempt to reduce or prevent inflation.
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