Answer: Contractionary fiscal policy paired with expansionary monetary policy.

**Explanation:** - **Option A** is incorrect because an expansionary fiscal policy (e.g., tax cuts or increased government spending) would raise aggregate output. However, if accompanied by a contractionary monetary policy (reduced money supply), interest rates would increase, negatively impacting private sector demand. This would result in higher output and interest rates, with government spending constituting a larger proportion of national income. - **Option B** is incorrect because a combination of contractionary monetary and fiscal policies would lead to higher interest rates (assuming the monetary policy's impact dominates), reducing private demand. Simultaneously, higher taxes and reduced government spending would lower aggregate demand from both sectors. - **Option C** is correct because a contractionary fiscal policy (e.g., reduced government spending or higher taxes) combined with an expansionary monetary policy (lower interest rates) would stimulate the private sector. This would cause the private sector's share of GDP to rise while the public sector's share declines.

Author: LeetQuiz Editorial Team