Suppose that a presidential candidate who promised large personal income tax cuts is elected. Which outcome is MOST likely?
A) a decrease in short-run aggregate supply
B) a decrease in aggregate demand
C) an increase in short-run aggregate supply
D) an increase in aggregate demand

Question

Quizplus · Accepted Answer

If a presidential candidate who promised large personal income tax cuts is elected, it is likely to result in an increase in aggregate demand. This is because tax cuts increase disposable income, which leads to an increase in consumer spending. As a result, firms increase production to meet the higher demand for their goods and services, leading to an increase in aggregate demand.

Suppose That a Presidential Candidate Who Promised Large Personal Income