Question

a decrease in business taxes will tend to: select one: a. decrease aggregate supply and decrease aggregate demand b. increase aggregate demand but not change aggregate supply c. increase aggregate supply but not change aggregate demand d. increase aggregate demand and increase aggregate supply

Answer 1

A decrease in business taxes tends to increase aggregate demand but not change aggregate supply. Therefore, the correct option is C.

Step-by-step explanation:

A decrease in business taxes tends to increase aggregate demand but not change aggregate supply.

When business taxes are decreased, it puts more money into the hands of businesses. This leads to an increase in their investment and spending. As a result, aggregate demand increases because both consumption and investment spending increase. However, it does not have a direct impact on aggregate supply.