The government increases taxes. What might be a reason for this change in fiscal policy?

A deficit due to improving nationwide public transportation

A deficit due to more monies flowing in from investors

A surplus due to greater amounts of income from exports

A surplus due to more government spending on building roads

Question

The government increases taxes. What might be a reason for this change in fiscal policy?

 A deficit due to improving nationwide public transportation

 A deficit due to more monies flowing in from investors

 A surplus due to greater amounts of income from exports

 A surplus due to more government spending on building roads

anonymous · Answer

The government increases taxes in times of a boom, and it has contractionary effects, reducing levels of aggregate demand- spending by consumers. We all know that this occurred by higher wages as also demand for resources has risen by firms to maintain stocks for business. So do you know what the answer is?