Question

If households view a tax cut as temporary, then the tax cuta.has less of an effect on aggregate demand than if households view it as permanent. b.has the same effect as when households view the cut as permanent. c.has more of an effect on aggregate demand than if households view it as permanent. d.has no effect on aggregate demand.

Answer 1

Answer:

A, Has less of an effect on aggregate demand than if households view it as permanent.

Explanation: A Tax is a levy imposed by a Government on both its employed citizens, goods and organisations that are engaged in profit making and productive activities within the country.

A tax cut is a reduction by certain amount or percentage on the tax paid sometimes offered by Government as a buffer or to encourage certain productive activity.

A temporary tax cut usually have little effect on aggregate demand than when viewed as permanent by households.