Which Is More Likely to Stimulate Aggregate Demand in a Timely

question 72

Multiple Choice

Which is more likely to stimulate aggregate demand in a timely manner?

• A) a tax cut, because households will increase their consumption by the full amount of their tax reduction
• B) a tax cut, because disbursement can take place quickly while spending increases are generally spread out over several years
• C) a spending increase, because disbursement can take place quickly while a tax cut will be spread out over several years
• D) a spending increase, because it can be easily reversed once the economy has recovered

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