As the budget includes a spending projection of $5.1 trillion while tax revenue is expected to be $4.8 billion, the fiscal policies that Congress have to adopt to maintain spending levels without increasing the debt is to increase taxes. The Option B is correct.
Is raising taxes an example of fiscal policy?
When government uses the fiscal policy to decrease the amount of money available to the populace, this is called contractionary fiscal policy which include increasing taxes and lowering government spending.
A Contractionary fiscal policy is when the government taxes more than it spends either by increasing tax rates, decreasing spending, or both. It is best used during times of economic prosperity.
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