High tax rates that put money into the government's funds tend to slow spending, and ultimately slow the economy.

Question

Quizplus · Accepted Answer

Fiscal policy refers to the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending. When the government raises taxes, the result is a tightening of consumer and business spending, which has the tendency of slowing the economy. This draws money away from the private sector.

High Tax Rates That Put Money into the Government's Funds