How did the tax cut of 1964 affect the inflation rate?

Question

Quizplus · Accepted Answer

The Tax Reduction Act of 1964 reduced personal and corporate income tax rates, and also increased tax credits and deductions. This resulted in increased consumer spending and business investment, which stimulated economic growth. However, it also led to increased demand for goods and services, which in turn increased prices and inflation. Despite this, the overall inflation rate remained relatively low, and even decreased to under 2 percent in 1965. Therefore, option B is the correct answer.

How Did the Tax Cut of 1964 Affect the Inflation