A small country is collecting more money than it spends. What is MOST likely the fiscal policy stance that this government takes? expansionary stance

contractionary stance

economic stance

neutral stance

Contractionary stance

Explanation:

When the government collects more extra money than it is spending, it signals a robust and fast-growing economy. Contractionary fiscal policy measures are applied to slow down growth and reduce inflationary pressure.

The contractionary fiscal policy is the government's mechanism of reducing the money supply in the economy. The government may reduce its spending in the economy, increase business taxes, or both. These actions decrease the money supply in the economy, which reduces the amount that businesses can borrow to expand. The objective is to lower the aggregate demand, thereby slowing the country's rate of producing new goods and services.

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