## Answers

Answer: When government follows contractionary fiscal or monetary polcy then its means its trying to suck the liquidity from the market hence under such conditions it'll decrease its spending and can increase the taxes or can do both.So people will have less to spend on things or businesses.It will lead to leftward shift in aggregate Demand Curve.

So according to such explanation Option A will be the correct answer ie economy will move from B to A point.

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