Question

Based on the taxing and spending cycle, how will changing expenditures affect taxes collected by the government?

Spending less will help lower prices, leading to an increase in tax revenue for the government.
Spending less will reduce services, leading to a reduction in tax revenue for the government.
Spending more will boost prices, leading to an increase in tax revenue for the government.
Spending more will increase services, leading to a reduction in tax revenue for the government.

Answer 1

The Correct Answer is

Spending less will reduce services, leading to a reduction in tax revenue for the government.

Step-by-step explanation:

Fiscal policy has multiple impacts on the economy, the size of which depends upon the Fiscal policy.

Except in the instance of Lump-sum taxes, taxes decrease the size of the multiplier.

Increase fiscal policy motivated to an increase in actual GDP.

While contraction fiscal policy drives to a reduction in actual GDP. Because the character of any change in taxes or alterations is consumed by keeping the first round of spending, shifts in government buying of goods and services have a more important impact on the economy that equal size changes in orders or taxes.