Which of the following policies will reduce the government deficit? (a) Tax increases and a decrease in government spending

Economics Jan 28, 2021

Which of the following policies will reduce the government deficit?

(a) Tax increases and a decrease in government spending.

(b) Decreased taxes and increased government spending.

(d) Increased investment in infrastructure and decrease in corporate taxes.

Expert Solution

Which of the following policies will reduce the government deficit? (a) Tax increases and a decrease in government spending.

These two strategies will bring more revenue into the government through tax increases and, at the same time, cutting government spending will slow the rate at which revenue is leaving the government treasury.

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