How can government increase the quantity of aggregate output demanded by changing government spending and taxes? A. Government can increase the quantity of aggregate output demanded by decreasing government spending followed by an increase in taxes. B. Government can increase the quantity of aggregate output demanded by increasing government spending or by cutting taxes. C. Government can increase the quantity of aggregate output demanded by decreasing government spending or by raising taxes. D. Government can increase the quantity of aggregate output demanded by keeping government spending constant and raising taxes. Part 2 Each additional dollar of government spending represents an additional dollar of demand for output; whereas, each additional dollar of tax cuts generates less than an additional dollar of demand for output because a portion of each dollar of increased disposable income will be saved rather than spent to buy output. A. True B. False