Note AcademyNote Academy
Start

Economics · May / June 2021 · Paper 11 · Question 16

2281Fiscal policy

An economy has a high rate of inflation. In response to this, its government increases income tax. What is the most likely reason for this increase?

  1. Ato discourage the consumption of harmful goods
  2. Bto raise money for government spending
  3. Cto redistribute income
  4. Dto reduce total demand

As printed in the paper

Show the answer

Correct answer: D. to reduce total demand

Sit this whole paper →More on Fiscal policy

Make a free account to save your answers and see your weak topics and ask the AI why a wrong answer is wrong.