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QUESTION:
Which of the following statements regarding taxes is correct?
a. A permanent change in taxes has a greater effect on aggregate demand than a temporary change in taxes.
b. An increase in taxes shifts the aggregate-demand curve to the right.
c. Most economists believe that, in the short run, the greatest impact of a change in taxes is on aggregate supply, not aggregate demand.
d. A decrease in taxes shifts the aggregate-supply curve to the left.
ANSWER:
a. A permanent change in taxes has a greater effect on aggregate demand than a temporary change in taxes.
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