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Social Studies

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When inflation begins to climb to unacceptable levels in the economy, the government should?

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MissPhiladelphia MissPhiladelphia

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use contractionary fiscal policy to shift aggregate demand to the right. Contractionary fiscal policy is a form of fiscal policy that involves increasing taxes, decreasing government expenditures or both in order to fight inflationary pressures. Due to an increase in taxes, households have less disposal income to spend. Lower disposal income decreases consumption.

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