Question

Tax cuts shift aggregate demand Group of answer choices right as do increases in government spending. g left as do increases in government spending. left while increases in government spending shift aggregate demand right. right while increases in government spending shift aggregate demand left.

Answer 1

Answer: right as do increases in government spending

Explanation:

A tax cut will lead to an increase in the aggregate demand. Also, an increase in government expenditure will also lead to a rise in aggregate demand.

A tax cut and rise in government spending shifts the aggregate demand curve to the right. This is because when there's a tax cut, the disposable income available to the people increases and hence they can spend more and this will lead to rise in the aggregate demand.