A tax cut has less impact on aggregate demand than an increase in government purchases of the same size because: A portion of the tax cut is saved. O Tax cuts are only temporary but changes in government spending are permanent. Tax cuts do not increase disposable income. O The tax-cut multiplier is equal to 1.

A tax cut has less impact on aggregate demand than an increase in government purchases of the same size because: A portion of the tax cut is saved. O Tax cuts are only temporary but changes in government spending are permanent. Tax cuts do not increase disposable income. O The tax-cut multiplier is equal to 1.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Give typing answer with explanation and conclusion

A tax cut has less impact on aggregate demand than an increase in government purchases of the
same size because:
A portion of the tax cut is saved.
O Tax cuts are only temporary but changes in government spending are permanent.
Tax cuts do not increase disposable income.
O The tax-cut multiplier is equal to 1.

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