Reducing taxes by a specific fixed amount will usually:
A)lower income and lower spending.
B)raise income and lower spending.
C)lower income and raise spending.
D)raise income and raise spending.

Question

Quizplus · Accepted Answer

Reducing taxes by a specific fixed amount will keep more money in people's pockets, leading to an increase in disposable income. With more money to spend, people will generally spend more, which will increase spending and demand in the economy. This, in turn, leads to an increase in income as businesses respond to the increased demand for their goods and services. Therefore, reducing taxes by a specific fixed amount will raise income and raise spending.

Reducing Taxes by a Specific Fixed Amount Will Usually