Within the aggregate demand and aggregate supply framework, fiscal policy that emphasizes activist government policies to stabilize the economy would view cutting personal income taxes as primarily a shift:
A)right in the aggregate demand curve.
B)left in the aggregate demand curve.
C)right in the aggregate supply curve.
D)left in the aggregate supply curve.

Question

Quizplus · Accepted Answer

Cutting personal income taxes would put more money in the hands of consumers, increasing their purchasing power and leading to an increase in aggregate demand. Therefore, it would primarily result in a shift to the right in the aggregate demand curve.

Within the Aggregate Demand and Aggregate Supply Framework, Fiscal Policy