Answer:
The question is incomplete. The completed question is as follows:
What would most likely happen if Congress decreased taxes and increased spending?
a. Economic contraction
b. Economic expansion
c. Economic stability
d. Economic stagnation
The answer is: b
Explanation:
There are different ways to calculate the output generated by a country in a given period. The most common is to add up the: total private consumption and investments, government budget deficit or surplus and the net exports. In doing so, an approximated figure of gross national output is calculated. By decreasing taxes, government revenue decreases, however, private disposable income increases stimulating private consumption and to some extent, investments. Increasing government spending particularly in large scale projects could contribute to a budget deficit but it could also lead to a positive stimulus in the economy creating jobs while signalling investment opportunities to foreign investors. Holding all other factors constant, a decrease in taxes and increase in government spending would contribute positively toward the economy resulting in some economic growth.
