Some economists believe that taxes have an important effect on the labor supply. They argue that higher taxes cause people to want to work less and that lower taxes cause them to want to work more. Consider how this effect alters the macroeconomic analysis of tax changes. a. How does a tax cut affect the aggregate demand curve, Short-run aggregate supply curve and long-run aggregate supply curve? 1:. What is the short-run and long run impact of a tax cut on output and the price level