Question

define the term fiscal drag.​

Answer 1

Answer:

Fiscal drag is an economic term whereby inflation or income growth moves taxpayers into higher tax brackets. ... The increase in taxes reduces aggregate demand and consumer spending from taxpayers as a larger share of their income now goes to taxes, which leads to deflationary policies, or drag, on the economy.

Answer 2

Answer:

Fiscal drag is an economic term whereby inflation or income growth moves taxpayers into higher tax brackets. ... The increase in taxes reduces aggregate demand and consumer spending from taxpayers as a larger share of their income now goes to taxes, which leads to deflationary policies, or drag, on the economy