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Basic Question 10 of 15

A tax cut reduces the amount of money that taxpayers owe the government and frees up money for personal spending. This can cause a ______.

A. demand shock
B. supply shock
C. tax shock

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Learning Outcome Statements

describe qualities of effective central banks; contrast their use of inflation, interest rate, and exchange rate targeting in expansionary or contractionary monetary policy; and describe the limitations of monetary policy

CFA® 2024 Level I Curriculum, Volume 1, Module 4.