In the short run, tax cuts that are intended to increase aggregate supply have
A)almost no effect on aggregate demand, and a small effect on aggregate supply.
B)about an equal effect on both aggregate demand and aggregate supply.
C)a much greater effect on aggregate demand than on aggregate supply.
D)almost no effect on aggregate supply, and a negative effect on aggregate demand.

Question

Quizplus · Accepted Answer

Tax cuts intended to increase aggregate supply typically result in consumers having more disposable income, which leads to an increase in consumer spending. This increase in spending boosts aggregate demand significantly, often more so than the direct effect on aggregate supply.

In the Short Run, Tax Cuts That Are Intended to Increase