Respuesta :
The answer is INCREASE because they cut the tax rate which means you are left with more money when you get paid or buy something. And the second part is EXPANSIONARY POLICY because this is an act by the government where they cut taxes so people have more income to spend to fight recession and the flow of money continues to move.
The correct option is B and D respectively. The amount Ron can save increases when the government decided to cut the tax rate. This tax cut was a part of the government’s expansionary policy. By giving consumers and businesses more money, an expansionary fiscal policy aims to boost economic activity. It's one of the main ways governments react to business cycle contractions and avoid economic recessions.
What is the effect of Taxes on aggregate demand?
In the aggregate demand and supply model, an increase in the tax rate will cause the aggregate demand curve to move to the left by an amount equal to the initial shift in aggregate spending brought on by the rise in the tax rate multiplied by the new multiplier value.
A recession or depression can be avoided or ended by implementing an expansionary fiscal strategy, which comprises raising expenditure or lowering taxes. To slow down unsustainable economic growth, a contractionary fiscal policy involves cutting spending or raising taxes. Tax reductions, transfer payments, refunds, and greater public investment in initiatives like infrastructure upgrades are all examples of expansionary fiscal policy. Through increased discretionary government spending and government contracts, the economy might receive a financial boost.
Learn more about Expansionary Fiscal Policy here:
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