If the U.S.government decides to eliminate a budget surplus by reducing taxes, the most likely effect would be
A)falling prices.
B)a reduction in the trade deficit.
C)an increase in unemployment.
D)upward pressure on prices.

Question

Quizplus · Accepted Answer

Reducing taxes would increase disposable income and consumer spending, which would increase demand for goods and services. This increased demand could lead to upward pressure on prices as businesses raise prices to meet the increased demand.

If the USGovernment Decides to Eliminate a Budget Surplus by Reducing Taxes