The federal government raises corporate income tax rates in order to reduce the budget deficit. This change will likely ______ economic activity, which is an example of ______ policy.

Question

Quizplus · Accepted Answer

Increasing corporate income tax rates will decrease the amount of money that corporations have to invest in their businesses, potentially leading to a decrease in economic activity. This is an example of fiscal policy, as it involves changes in government spending and taxation. Monetary policy, on the other hand, involves changes in the money supply and interest rates.

The Federal Government Raises Corporate Income Tax Rates in Order