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:

Entrepreneurship

The process of designing, launching, and running a new business or enterprise, particularly one that is characterized by innovation and risk.

Physical Facilities

The buildings, spaces, and related equipment owned or leased by an organization to support its operations.

Capital

Financial resources or assets owned by an individual or organization, used for investment, production, or other economic purposes.

Tax Deduction

An expense that can be subtracted from an individual's or organization's taxable income, effectively reducing the amount of taxes owed.