To explain:
The reason for government actions increasing deficits is considered expansionary fiscal policy and government actions decreasing deficits is considered contractionary policy.
Explanation of Solution
Fiscal policy is similar to the
The fiscal government actions that decrease the deficits are considered as contractionary fiscal policy. This is because a decrease in deficit reduces the money supply, which decreases the demand. This will in turn reduce the
Fiscal policy:
That means in economics through which a federal government keeps a check and adjusts its expenditure level and tax rates, or duty charge is referred as fiscal policy. This policy helps to monitor and guide the country's economic situation.
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