Answer :
Final answer:
Taxes play a crucial role in the economy by redistributing income, funding government activities, and influencing consumer spending and corporate investment.
Explanation:
True. Taxes constitute the insertion of income into the spending-income cycle. When taxes are collected by the government, they are injected back into the economy through government spending and transfers, influencing consumer spending and corporate investment.
Tax receipts increase with income levels, while government spending remains unaffected by GDP levels. This relationship showcases how taxes play a crucial role in the economy by redistributing income and funding government activities.
Circular flow of income demonstrates how government revenues from taxes are balanced against government purchases and transfers, highlighting the impact of taxes on the economy's financial flow.
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