Fiscal policy would most likely cause the greatest increase in a budget surplus is Raising taxes while lowering spending. Thus the correct answer is D.
The utilization of expenditures of government to control the economy refers to fiscal policy. It is used by the government to encourage long-term economic growth and to eliminate poverty by improving the standard of living.
The objective of fiscal policy is to maintain full employment by bringing better opportunities in jobs which helps in maintaining the growth of the economy as poverty is reduced.
It helps to regulate the prices of products by stimulating demands and supply. When the fiscal policy increases it also increases the rate of interest which helps in growing trade deficits and controlling inflation.
Therefore, option D Raising taxes while lowering spending is appropriate.
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