If expansionary taxation policies are left Unchecked, which is the most Likely result?

a. Reduced profits

b. High inflation

c. A Drop in Production

d. Reduced disposable income

Answer:- c. A Drop in Production

The correct answer is ‘high inflation.’ Expansionary fiscal policy is a type of macroeconomic policy that increases aggregate demand by increasing government spending or decreasing taxes. This can lead to increased economic growth and employment in the short run, but it can also lead to inflation if it is not implemented carefully.

If expansionary fiscal policy is left unchecked, it can lead to a situation where there is too much money chasing too few goods. This can cause prices to rise, which can lead to inflation. Inflation can be harmful to the economy because it can erode the value of savings and make it difficult for businesses to plan for the future.

Therefore, it is important for governments to carefully manage expansionary fiscal policy to avoid inflation.