A tax cut causes the planned expenditure line to shift upward

Economics Nov 25, 2020

A tax cut causes the planned expenditure line to shift upward.

True

False

Expert Solution

Answer: True

When a reduction in tax rate the aggregate expenditures curve upward by an amount equal to the initial increase in consumption created by the lower tax rate.

So a tax cut causes the planned expenditur line to shift upward.

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