Tax cuts
A)and increases in government expenditures shift aggregate demand right.
B)and increases in government expenditures shift aggregate demand left.
C)shift aggregate demand right while increases in government expenditures shift aggregate demand left.
D)shift aggregate demand left while increases in government expenditures shift aggregate demand right.

Question

Quizplus · Accepted Answer

Tax cuts increase disposable income, leading to an increase in consumer spending. This increase in consumption expenditure leads to an increase in aggregate demand. Therefore, tax cuts shift aggregate demand to the right. Similarly, an increase in government expenditures also increases aggregate demand and shifts it to the right.

Tax Cuts