A Tax Cut Shifts the ______ to the Right, and the Aggregate

question 59

Multiple Choice

A tax cut shifts the ______ to the right, and the aggregate demand curve ______.

• A) IS; shifts to the right
• B) IS; does not shift
• C) LM: shifts to the right
• D) LM; does not shift

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Definitions:

Excise Tax

A tax on sales of a good or service.

Producers

Individuals or businesses that create and supply goods or services in the economy.

Tax Rate

The amount of tax people are required to pay per unit of whatever is being taxed.

Excise Tax

A tax levied on specific goods, services, or transactions, such as tobacco, alcohol, and fuel, usually to discourage consumption or raise government revenue.