O-LevelEconomicsGovernment and the macroeconomy2281/11 · May/June 2021 · Q161 Mark
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?
Ato discourage the consumption of harmful goods
Bto raise money for government spending
Cto redistribute income
Dto reduce total demand
✓ Correct answer
D: to reduce total demand
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