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A decrease in taxes will shift aggregate demand to the _____, cause consumption to _____, and cause output to _____. Due to the crowding-out effect, investment will _____.

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Answer:

right, increase, increase, decrease

Step-by-step explanation:

In simple words, a decrease in taxes will result in more disposable income to the individuals which will further lead to increase in demand. Increase in demand will shift the overall economy curve to grow leading to increase in output and consumption.

As per the crowding out effect, the decrease in taxes will increase demand and spending leading to inflation which causes money to value less. Hence individuals will mostly consume their income and will invest less.

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