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EXPERT SOLUTION ANSWER

The question of how tax policy affects inflation and Gross Domestic Product (GDP) is a complex one. In general, taxes can be used to reduce inflation by reducing the amount of money in circulation, while also providing revenue for government spending. This spending can be used to stimulate economic growth, which in turn can lead to higher GDP. On the other hand, taxes can also be used to reduce economic growth by reducing the amount of money available for investment and consumption. Ultimately, the effects of tax policy on inflation and GDP depend on the specific policies implemented and the economic conditions at the time.