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Compared to a decrease in government expenditure, does raising the payroll tax result in higher, lower,...

Compared to a decrease in government expenditure, does raising the payroll tax result in higher, lower, or the same level of inflation?

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Answer #1

*Answer :-

Usually Government Use Expenditure Are Use to Reduce Inflation Form The Market. If Government Increase its Expenditure In The Economy it Increase Inflation And If the Decrease its Expenditure They Decrease The Inflation In The Economy. But At The Other Side Taxes Are Also Important To Reduce Taxes. By Using Taxes Government Decrease The Money From The Economy So For The Result Of That It Decrease the Demand And Price Goes Down So Inflation Reduce Form The Economy.

Payroll Tax Is Deducted On The Total Salaries Of Employers or Employees, So It Decrease The Salary Of the Employers Which Means They Spend less Money And Save it So Demand for Products Is Decrease and Its Price Also decrease So As a Result It Leads To Lower Level Of Inflation In The Market.

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