According to the traditional viewpoint, a tax cut without a cut in government spending:
A)stimulates consumer spending and reduces national saving.
B)stimulates consumer spending and reduces private saving.
C)has no effect on consumer spending but reduces national saving.
D)has no effect on consumer spending but reduces private saving.

Question

Quizplus · Accepted Answer

A tax cut without a cut in government spending increases disposable income, leading to higher consumer spending, while the government borrows more to finance the deficit, reducing national saving.

According to the Traditional Viewpoint, a Tax Cut Without a Cut