When the government cuts personal income taxes, for instance, it increases households' take home pay.As a result
A)households will save all of this additional income, and spend little or nothing on consumer goods.
B)households will save some of this additional income, but will also spend some of it on consumer goods.
C)households will not save any of this additional income, but will spend all of it on the stock market.
D)households will neither save the additional income nor spend it on consumer goods.

Question

Quizplus · Accepted Answer

When personal income taxes are cut, households have more disposable income. Some of this additional income will be saved, but households are also likely to spend some of it on consumer goods. This increased consumption can stimulate economic growth by increasing demand for goods and services.

When the Government Cuts Personal Income Taxes, for Instance, It