Suppose a Tax Cut Affects Aggregate Demand and Aggregate Supply

question 6

Multiple Choice

Suppose a tax cut affects aggregate demand and aggregate supply.Which of the shifts raise real GDP?

• A)both the shift of aggregate demand and the shift of aggregate supply
• B)the shift of aggregate demand,but not the shift of aggregate supply
• C)the shift of aggregate supply,but not the shift of aggregate demand
• D)neither the shift of aggregate demand nor the shift of aggregate supply

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Definitions:

Percent Less

A term used to indicate a reduction in amount or rate by a specified percentage.

Increased By

A term describing how an amount is made larger or expanded in size, volume, number, or extent.

Reduction

A decrease in the amount, size, or intensity of something, often referring to prices, costs, or risks.

Percent Change

The measure of how much a quantity has grown or shrunk, represented as a percentage of the original quantity.