If the Government Cuts Taxes by $200 Million and Simultaneously

Multiple Choice

If the government cuts taxes by $200 million and simultaneously decreases government spending by $200 million,then

A) Aggregate demand will rise because the government decrease in purchases occurs so slowly.
B) Aggregate demand in the economy will remain unchanged.
C) People will spend only part of their tax cut,so aggregate demand will eventually rise by $200 million.
D) Aggregate demand will decrease by $200 million.