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Economics · May / June 2023 · Paper 12 · Question 17

2281Fiscal policy

A government decides to leave direct taxes unchanged but to increase indirect taxes. What is this policy intended to achieve?

  1. Ato increase the value of the exchange rate
  2. Bto redistribute income from higher to lower income groups
  3. Cto reduce a budget deficit
  4. Dto reduce the rate of inflation

As printed in the paper

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Correct answer: C. to reduce a budget deficit

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