Which action does the government take to foster economic growth?

Decreasing taxes is a strategy the government employs to stimulate economic growth. When taxes are reduced, individuals and businesses have more disposable income, which can lead to increased consumer spending and investment. This boost in spending can foster demand for goods and services, prompting businesses to expand operations, hire more employees, and increase production.

Moreover, lower taxes can improve the cash flow for businesses, making it easier for them to invest in new projects, research and development, or capital improvements. The overall effect of decreased taxation can lead to a more dynamic economy, with higher levels of employment and economic activity.

While other options such as increasing taxes or decreasing spending typically can lead to tighter consumer budgets and reduced business investment, thereby negatively impacting growth, decreasing taxes actively encourages economic participation and expansion.