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1. They can lower wages so that total spending decreases.
2.  Increasing taxes (contractionary  fiscal policy)
3. Increase interest rates (contractionary monetary policy)
4. Reduce subsidies

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Expenditure dampening policies  Contractionary fiscal policy - Increase taxes - Fall in disposable income disincentivises spending - Encourages saving - Fall in consumer spending - Fall in aggregate demand

Contractionary monetary policy - Raising interest rates - Cost of borrowing rises - Fall in consumer & investment spending - Fall in aggregte demand

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- Increase interest rates to encourage saving instead of borrowing and spending
- Increase taxes (Income tax)

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- increase increase rates
- increase taxes
-  increase the supply of credit

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-increased interest rates
-high rates of inflation
-low consumer confidence in the market
-deflation
-high taxes

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Higher income tax
increase interest rates

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Increase the cost of borrowing - increases the incentive to save

Increase income tax rates

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Increase Taxation
Increase Interest Rates

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Reduce subsidies
Increase tax

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Increase interest rates to discourage borrowing and encourage savings (Monetary policy)
Increase tax to discourage spending by consumers

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- increase interest rates to encourage saving
- increase tax e.g income tax to decrease disposable income
- devalue currency to reduce demand for imports?
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Increase taxes
Increase interest rates

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Increase interest rate to promote saving and stop people from spending

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raise indirect taxes
raise income tax
devalue exchange rate

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- increase interest rates
- increase tax rates
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Expenditure reduction policies which decreases aggregate demand will decrease incomes. This decreases the propensity to import from other countries. This might be through contractionary fiscal and monetary policies such as high interest rates which increase costs of borrowing, higher taxes which decreased disposable income etc.

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raise interest rates
increase taxes

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Hello I am Neel