Under an contractionary taxation policy, the government can reduce the deficit by ...

-increasing taxes

-reducing taxes

-increase spending

-reduce spending

A: Increasing taxes

Explanation:

The operative word here is Taxation Policy, this isn't asking for a contrationary economic model, it is asking for what the government can do with taxes, so although the government would also try to reduce spending, that doesn't have to do with taxes, so Increasing taxes is the correct answer.