How does a tax cut affect the expenditure schedule?
A)It causes movement to the left along the schedule.
B)It causes the schedule to shift upward.
C)It causes movement to the right along the schedule.
D)It causes the schedule to shift downward.

Question

Quizplus · Accepted Answer

A tax cut increases disposable income, leading to an increase in consumption. This results in the expenditure schedule shifting upward, as people are likely to spend more with the additional disposable income they have.

How Does a Tax Cut Affect the Expenditure Schedule