Question

The federal government announced significant tax cuts, enabling people to keep a greater portion of their income.What will happen to the demand curve in this situation?They will find a substitute for the product and purchase that instead. They will initially increase their purchasing and stock up on the product. They will continue to purchase the product and decrease other purchases if necessary. They will stop purchasing the product and wait until the price comes back down.

Answer 1

Answer:

They will initially increase their purchasing and stock up on the product

Explanation:

Tax cuts would increase the disposable income of the people. As a result of the tax cut, demand would increase and the demand curve would shift to the right.

If the tax on a good were increased, the good would be more expensive and consumers would find a substitute for the product and purchase that instead or will stop purchasing the product and wait until the price comes back down.

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