According to the traditional view, if taxes are cut without cutting government spending, then the long-run effects will be
Capital and consumption.
A)higher; higher
B)lower; lower
C)higher; lower
D)lower; higher

Question

Quizplus · Accepted Answer

According to the traditional view, cutting taxes without reducing government spending increases the deficit, leading to higher interest rates, which can crowd out private investment, resulting in lower capital and consumption in the long run.

According to the Traditional View, If Taxes Are Cut Without