Which Is More Likely to Stimulate Aggregate Demand in a Timely

Multiple Choice

Which is more likely to stimulate aggregate demand in a timely manner?

A) a tax cut, because households will increase their consumption by the full amount of their tax reduction
B) a tax cut, because disbursement can take place quickly while spending increases are generally spread out over several years
C) a spending increase, because disbursement can take place quickly while a tax cut will be spread out over several years
D) a spending increase, because it can be easily reversed once the economy has recovered