A Cut in Taxes _____, Shifting the Aggregate Demand Curve

question 35

Multiple Choice

A cut in taxes _____, shifting the aggregate demand curve to the _____.

• A) decreases government transfers and consumption; right
• B) increases disposable income and consumption; right
• C) decreases the marginal propensity to save, increasing consumption; left
• D) increases corporate profits and investment; left

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Definitions:

Owners' Equity

Refers to the residual interest in the assets of an entity after deducting liabilities, representing the capital belonging to the owners or shareholders.

Total Liabilities

The combined amount of all debts and obligations a company owes to outside parties at a given time.

Total Assets

The aggregate of all assets owned by an entity, both current and non-current, as recorded in the financial statements.

Accounts Receivable

Amounts owed to a business for services performed or goods delivered.