Which of the following would cause a central bank to raise interest rates?

While taxation can influence economic activity, it does not directly lead to an increase in interest rates by a central bank. Changes in tax policy may affect disposable income and spending but are not a primary factor that central banks consider when adjusting monetary policy.

Deflation, characterized by falling prices, typically prompts central banks to lower interest rates to stimulate economic growth. Lower rates encourage borrowing and spending, which can help counteract the negative effects of deflation, making it unlikely that a central bank would raise rates in such a scenario.

Economic growth often leads to increased demand, but it does not necessarily compel a central bank to raise interest rates. In fact, during moderate growth, central banks may keep rates steady or even lower them to support continued expansion. Interest rate hikes are more directly related to the inflationary pressures that can accompany rapid growth.