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inflation and interest rates L10 M2 economics

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Question:

Higher direct taxes to control inflation:

Author: Dakota howells



Answer:

1. Increase in direct tax is a deflationary fiscal policy 2. Higher taxes cause a drop in household disposable income 3. Consumers see a drop in their spending power 4. This feeds thru to weaker ad 5. Which will cause a fall in demand pull inflationary pressure


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