Which federal action is likely to boost aggregate demand?

The option of reducing personal income taxes is likely to boost aggregate demand because it increases the disposable income of individuals. When personal income taxes are lowered, consumers have more money available to spend on goods and services. This increase in consumer spending is a primary driver of aggregate demand in the economy, as higher consumption leads to greater demand for products and services, prompting businesses to increase production and possibly hire more workers, thereby fostering economic growth.

Increasing corporate tax rates, implementing new regulations on businesses, or decreasing government spending on infrastructure would generally have the opposite effect, as they could constrain investment or reduce spending in the economy. By lowering personal income taxes, the government directly encourages consumer spending, making it a powerful tool for stimulating aggregate demand.