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A decrease in the tax rates in an economy will cause a: ​leftward...


A decrease in the tax rates in an economy will cause a:



  • ​leftward shift of the aggregate demand curve if the crowding-out effect is smaller than the size of the tax multiplier.

  • rightward shift of the aggregate demand curve if the crowding-out effect is equal to the size of the tax multiplier.

  • leftward shift of the aggregate demand curve if the crowding-out effect is larger than the size of the tax multiplier.

  • ​rightward shift of the aggregate demand curve if the crowding-out effect is larger than the size of the tax multiplier.

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