How Do Lower Taxes Affect Aggregate Demand

question 98

Multiple Choice

How do lower taxes affect aggregate demand?

• A)They increase disposable income, consumption, and aggregate demand.
• B)They reduce disposable income, consumption, and aggregate demand.
• C)They increase corporate investment and aggregate demand.
• D)They increase aggregate supply and thus increase aggregate demand as well.

---

Definitions:

Painting Department

A specific section within a manufacturing or production facility responsible for the application of paint or coatings to products as part of the finishing process.

Single Plantwide Overhead Rate

A method for allocating all manufacturing overhead expenses to products based on a single cost driver.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service.

Single Plantwide Factory Overhead Rate

A method of allocating factory overhead to products based on a single, consistent rate applicable throughout the entire manufacturing plant.