Tax cuts affect only aggregate demand not aggregate supply.

Name: Tax cuts affect only aggregate demand not aggregate supply.
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Question

Quizplus · Accepted Answer

Tax cuts can affect both aggregate demand and aggregate supply. They increase aggregate demand by increasing disposable income, thereby boosting consumption and investment. They can also affect aggregate supply by improving incentives for work, saving, and investment, potentially increasing productivity and the capacity to produce.

Tax Cuts Affect Only Aggregate Demand Not Aggregate Supply