under a contractionary taxation policy, the government can reduce the deficit by\nincreasing…

Brief Explanations:

A contractionary taxation policy aims to reduce the money - supply in the economy. By increasing taxes, the government takes more money from the public and businesses, which can help in reducing the budget deficit as it has more revenue. Reducing taxes would do the opposite. Increasing spending would widen the deficit, and increasing inflation is not a direct way to reduce the deficit through a taxation policy.

Answer:

increasing taxes.