Multiple choice

During which of the following conditions of economy, tax must be reduced?

  1. Inflation

  2. Boom

  3. Depression

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is depression. The depression refers to the state of economy when there is high unemployment and falling price levels and people have less purchasing power. Hence, if taxes are reduced at the time of depression, the people will be left with more purchasing power and they will demand. Hence, the prices will rise or come to normal level. This will also boost employment.

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