Permanent tax cuts shift the AD curve
A)farther to the right than do temporary tax cuts.
B)not as far to the right as do temporary tax cuts.
C)farther to the left than do temporary tax cuts.
D)not as far to the left as do temporary tax cuts.

Question

Quizplus · Accepted Answer

Permanent tax cuts are more likely to increase consumer and business confidence, leading to more long-term investment and spending, and thus a larger shift of the AD curve to the right. Temporary tax cuts may provide a short-term boost to spending but may not have the same long-term impact.

Permanent Tax Cuts Shift the AD Curve