Which of the following is a possible outcome of austerity policies?

Question

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Austerity policies often involve cutting government spending, which can lead to a decrease in economic activity as businesses and individuals have less money to spend. This can lead to a negative cycle where low economic activity leads to lower tax revenues and higher government deficits, leading to further austerity measures. While an increase in tax revenues and a decrease in budget deficits may be goals of austerity policies, they are not always the immediate outcomes. Likewise, while austerity measures may be justified as a means to increase employment opportunities in the long run, initially they may result in job losses as government spending is cut.

Which of the Following Is a Possible Outcome of Austerity