If the government cuts taxes, this
A) decreases short-run aggregate supply.
B) decreases aggregate demand.
C) increases aggregate quantity demanded.
D) increases aggregate demand.
E) increases aggregate quantity supplied.

Question

Quizplus · Accepted Answer

Cutting taxes increases the disposable income of individuals and businesses, which leads to an increase in consumption and investment spending. This ultimately leads to an increase in aggregate demand.

If the Government Cuts Taxes, This