Contractionary Fiscal Policy: Real-World Examples

Worked IB Economics case study on contractionary fiscal policy — what happened, how to deploy it in a 15-mark answer, and the evaluation points on both sides.

Romanian government budget with higher taxes and restrained public spending reducing aggregate demand.

Contractionary Fiscal Policy

Romania's 2025–26 Fiscal Consolidation: Contractionary Fiscal Policy

Romania2025–2026

Romania raised taxes and froze public wages and pensions to reduce its large budget deficit, weakening aggregate demand in the process.

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