In a Closed Economy, a Contractionary Fiscal Policy

Multiple Choice

In a closed economy, a contractionary fiscal policy:

A) leads to an increase in both real GDP and the price level.
B) leads to a decrease in both real GDP and the price level.
C) leads to an increase in real GDP and a decrease in the price level.
D) leads to a decrease in real GDP and an increase in the price level.
E) does not change either real GDP or the price level.