According to the traditional view, if taxes are cut without cutting government spending, then the short-run effects will be:
A)higher output and lower unemployment.
B)higher output and higher unemployment.
C)no change in output or unemployment.
D)no change in output and higher unemployment.

Question

Quizplus · Accepted Answer

Cutting taxes without reducing government spending typically increases disposable income, leading to higher consumer spending. This boosts aggregate demand, resulting in higher output and lower unemployment in the short run.

According to the Traditional View, If Taxes Are Cut Without