Tax cuts stimulate ______ by improving workers' incentive and expand ______ by raising households' disposable income.
A) velocity; demand for loanable funds
B) demand for loanable funds; velocity
C) aggregate demand; aggregate supply
D) aggregate supply; aggregate demand

Question

Quizplus · Accepted Answer

Tax cuts stimulate aggregate supply by improving workers' incentive to work harder and expand aggregate demand by raising households' disposable income, which increases purchasing power and therefore demand for goods and services. Additionally, tax cuts can also incentivize businesses to invest and expand, further contributing to increased aggregate supply.

Tax Cuts Stimulate ______ by Improving Workers' Incentive and Expand