Question

unit test complete time rem 02:5 based on the taxing and spending cycle, how will changing expenditures affect taxes collected by the government? spending less will help lower prices, leading to an increase in tax revenue for the government. spending less will reduce services, leading to a reduction in tax revenue for the government. spending more will boost prices, leading to an increase in tax revenue for the government. spending more will increase services, leading to a reduction in tax revenue for the government. save and exit

Explanation:

In the taxing and spending cycle, increased government spending stimulates demand, which can raise prices (inflation). Higher prices increase the nominal value of goods/services, so tax revenues (often based on these values) rise. Other options are incorrect: less spending typically reduces demand/prices (lower revenue, not higher); more spending increasing services doesn’t directly reduce revenue, and less spending reducing services isn’t the primary link to revenue changes here.

Answer:

Spending more will boost prices, leading to an increase in tax revenue for the government.