What is the consequence of contractionary macroeconomic policies?

Contractionary macroeconomic policies are implemented with the intention of reducing aggregate demand in an economy. These policies often include measures such as increasing interest rates, reducing government spending, or raising taxes. The primary goal is to curtail inflation by slowing down economic growth.

Choosing a government budget surplus as a consequence of contractionary policies is valid because these policies can lead to reduced public spending or increased revenues from taxes, creating a fiscal environment that results in a surplus. When the government cuts back on spending, it spends less than it collects, thus generating a surplus. Additionally, higher interest rates can lead to increased tax revenues as economic activity slows, contributing further to a budget surplus.

In contrast to the other options, the budget surplus directly relates to the intended effects of contractionary policies, making it a logical consequence of such measures. Lower interest rates would contradict contractionary policy intentions, decreased economic output aligns with a different understanding of the economic cycle rather than being an immediate goal, and an inflation boom would be counterproductive to the aims of these policies.