Congress cuts income taxes.Is this an example of a demand-side or supply-side fiscal policy action?

Question

Quizplus · Accepted Answer

A cut in income taxes can have both demand-side and supply-side effects. From a demand-side perspective, it puts more money into the pockets of individuals, which can increase consumption and investment, leading to an increase in aggregate demand. From a supply-side perspective, it can provide an incentive for individuals and businesses to work, save, and invest more, leading to an increase in potential output or the capacity of the economy to produce goods and services. Therefore, both options A and B are correct.

Congress Cuts Income Taxes