When consumers have more disposable cash

Reference no: EM13185844

Reducing taxes increases the amount of available cash that consumers can use to purchase goods and services. The more cash consumers have, the more purchases they are likely make. As consumers in a country increase spending, it directly increases aggregate demand. Tax cuts could decrease individual income taxes, sales taxes or property taxes. An increase in government spending on goods and services can increase overall economic demand. The infusion of capital into the economy through government spending leads to increased financial resources in the private sector that injects financial resources into the hands of consumers. When consumers have more disposable cash, aggregate demand increases. Government spending can be for the purchase of goods or services from domestic companies. The first objective of aggregate planning is to determine your resources for the short-term up to 18 months. Resources include the total number of workers, total machine hours available and the amount of raw materials on hand. Other resources may include packaging materials, products in progress, and tools needed to produce and finish goods.

Reference no: EM13185844

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