When taxes decrease it is called an _ and the aggregate demand curve shifts __

Economics Dec 02, 2020

When taxes decrease it is called an _________ and the aggregate demand curve shifts __________. a.contractionary fiscal policy; left

b.contractionary monetary policy; left

c.expansionary monetary policy; right

d.expansionary fiscal policy; right

Expert Solution

Correct Option D) when tax are cut the aggregate spending increase shifting to the right Reducing taxes increases disposable income helping the consumer to spend additional which thereby increasing GNP. Lowering taxes thus pushes out the aggregate demand curve to right , outward.

A) increase of tax.

B) implementation of fiscal policy.

C) reducing short term interest rate.

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