An example of a fiscal policy designed to decrease real GDP is
A) a cut in taxes.
B) an increase in taxes.
C) an increase in government expenditure.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

An increase in taxes would decrease the disposable income of consumers, which would result in a decrease in spending and a decrease in aggregate demand. This decrease in aggregate demand would lead to a decrease in real GDP.

An Example of a Fiscal Policy Designed to Decrease Real