In the aggregate expenditures model, a tax cut causes a(n):
A)upward shift in the aggregate expenditures curve.
B)downward shift in the aggregate expenditures curve.
C)shift in the 45-degree line.
D)rightward movement along the aggregate expenditures curve.
E)leftward movement along the aggregate expenditures curve.

Question

Quizplus · Accepted Answer

A tax cut increases disposable income, leading to higher consumption and thus an upward shift in the aggregate expenditures curve.

In the Aggregate Expenditures Model, a Tax Cut Causes A(n)