GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Decreased government spending may result in ____ taxes.
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higher
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more
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lower
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None of the above
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Explanation:
Detailed explanation-1: -This is because when the government spends money, it directly purchases something, causing the full amount of the change in expenditure to be applied to the aggregate demand. When the government cuts taxes instead, there is an increase in disposable income.
Detailed explanation-2: -In the simplest terms, deficit spending is when a government’s expenditures exceed its revenues during a fiscal period, causing it to run a budget deficit.
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