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UI Post-UTME Economics 2023 (Model questions) Question 10

Question 10

Public Finance

During inflation, tax rates should ________

  1. A.increase
  2. B.decrease
  3. C.remain constant
  4. D.fluctuate
Show the answer and explanation

Answer: A (increase)

Explanation

Raising taxes reduces people's spending power and so reduces demand-pull inflation.