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The correct option is A, Congress cuts personal income taxes causing an increase in aggregate demand.
Aggregate demand is an economic concept used to describe the total demand for goods and services in an economy at a given time. It is the sum of all the individual demands for goods and services in the economy, including both consumer and business spending. Aggregate demand is an important concept in macroeconomics, as it is an important determinant of a nation’s overall economic health.
When aggregate demand is high, it indicates that the economy is doing well and that people are spending money. When aggregate demand is low, it indicates that people are not spending as much money, which can lead to an economic downturn. Aggregate demand is affected by a number of factors, including changes in the money supply, interest rates, and government spending.
It is also affected by changes in consumer confidence, which can lead to changes in consumer spending. In order to maintain a healthy economy, it is important for aggregate demand to be kept in balance with aggregate supply.
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