When Taxes Are Cut, Aggregate Demand ________ and Aggregate Supply

question 144

Multiple Choice

When taxes are cut, aggregate demand ________ and aggregate supply ________.

• A) increases; increases
• B) increases; decreases
• C) decreases; increases
• D) decreases; decreases
• E) increases; does not change

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Definitions:

Productivity Growth

An increase in the efficiency of production, often measured by the output of goods and services per unit of input over time.

Savings Rate

The percentage of money that individuals or households save from their disposable income.

Industrially Advanced Nations

Countries that have highly developed industries, technological infrastructure, and a high standard of living.

LDCs

Less Developed Countries; nations with low levels of economic development, often measured by gross domestic product (GDP) per capita, industrialization, and living standards.