Question

During the early years of the Reagan administration, some of the presidential advisors argued that tax cuts could reduce inflation because they would give people an incentive to produce more. Critics of this argument believed that tax cuts would increase inflation, not reduce it. The critics were arguing that tax cuts move the:

Answer 1

The correct solution is "Aggregate demand curve to the right with little change in long-run aggregate supply".

Step-by-step explanation:

• Together all long-term aggregate demand curve implies that the average has some degree of environmental production this could generate, anywhere at a competitive price.
• When major inflation increases prices multiply simultaneously, and now in the long term, your community could still contribute to the provision. The critics argued that tax reductions shift the aggregate equilibrium to the right with really no improvement throughout the aggregate production in the long term.