If the government ________ taxes to pay for spending on infrastructure, the result will most likely be a(n)________ in capital deepening.

Question

Quizplus · Accepted Answer

When the government increases taxes, it has more money to spend on infrastructure. Increased investment in infrastructure typically leads to increased capital deepening, which refers to the increased amount of physical capital that is available for each worker. Therefore, the correct answer is A, which states that an increase in taxes is likely to result in an increase in capital deepening.

If the Government ________ Taxes to Pay for Spending on Infrastructure