Government can use which of the following to reduce consumption?

Question

Multiple choice question.

Inflation

Interest rate decreases

Tax decreases

Tax increases

Answer 1

To reduce consumption, the government can use tax increases. By increasing taxes, disposable income for consumers decreases, which can lead to reduced spending and consumption.

The other options, such as interest rate decreases and tax decreases, are generally associated with increasing consumption rather than reducing it. Inflation, while it can influence consumption behavior, is not a direct tool for the government to control consumption levels.