Permanent tax cuts shift the AD curve
A)farther to the right than temporary tax cuts.
B)less to the right than temporary tax cuts.
C)farther to the left than temporary tax cuts.
D)less to the left than temporary tax cuts.

Question

Quizplus · Accepted Answer

Permanent tax cuts have a greater impact on the AD curve than temporary tax cuts as they provide a longer-lasting boost to disposable income and consumer spending. This results in a greater shift of the AD curve to the right. Temporary tax cuts, on the other hand, only provide a short-term boost to spending and have a smaller impact on the AD curve.

Permanent Tax Cuts Shift the AD Curve