Econ question

according to new classical economists, financing a reduction in current taxes by govt borrowing will MOST likely result in aggregate demand being: A. decreased b. increased c. unaffected d. increased or reduced, depending on interest rate levels.

Im gonna say B less taxes increases aggregate demand.

Correct answer is C, somebody explain plez

A increased borrowing eventually leads to high rates and less demand

guess it’s offset and govt deficit expansion effect will not take place