Explanation:

• Option A is correct because a decrease in taxes signifies an expansionary fiscal policy, which stimulates aggregate output. Simultaneously, an increase in interest rates reflects a contractionary monetary policy, often implemented to counteract inflationary pressures resulting from fiscal expansion.

• Option B is incorrect because a reduction in taxes is characteristic of expansionary fiscal policy, not contractionary fiscal policy.

• Option C is incorrect for the same reason as Option B; a tax cut is an expansionary fiscal measure, not a contractionary one.

This question tests the understanding of how fiscal and monetary policies interact to influence economic conditions.