The effect of a significant increase in individual income taxes is C. the economy will experience lower economic growth.
What are the effects of increasing taxes?
When taxes are increased, it means that people and companies have less money to spend on consumption and production.
This lead to lower economic growth as consumption and production (investment) are two key components of economic output.
Options for this question are:
A. cyclical unemployment will decrease
B. inflationary pressures will be greater
C. the economy will experience lower economic growth
D. input prices will rise in the short run
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