When the government decides to increase income taxes,this is an example of contractionary fiscal policy.

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Contractionary fiscal policy is a type of economic policy that involves decreasing government spending and/or increasing taxes to decrease aggregate demand, reduce inflationary pressures, and slow down economic growth. Increasing income taxes is an example of a contractionary fiscal policy as it reduces disposable income and reduces consumer spending, ultimately slowing down economic growth.

When the Government Decides to Increase Income Taxes,this Is an Example