What fiscal policy action does the government take to slow down economic growth?

The action of increasing taxes and decreasing spending is aimed at slowing down economic growth because it reduces the amount of money circulating in the economy. When taxes are increased, consumers have less disposable income, which leads to a decrease in consumer spending. Similarly, when the government decreases its spending, it reduces its demand for goods and services. This combination of actions effectively contracts economic activity, which can be necessary in situations where the economy is overheating or inflation is becoming a concern. By implementing these measures, the government can help to stabilize growth and prevent potential economic imbalances.

In contrast, options that suggest increasing public spending, decreasing taxes, or boosting government investments tend to stimulate growth by injecting more money into the economy, which can lead to increased demand and higher economic activity. These approaches would not be effective in slowing down growth, making them unsuitable for the goal of curbing an overheated economy.