An increase in taxes shifts the IS curve:
A)downward and to the left.
B)upward and to the right.
C)upward and to the left.
D)downward and to the right.

Name: An increase in taxes shifts the IS curve: A)downward and to the left. B)upward and to the right. C)upward and to the left. D)downward and to the right.
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Question

Quizplus · Accepted Answer

An increase in taxes reduces disposable income, leading to a decrease in consumption and aggregate demand, which shifts the IS curve downward and to the left.

An Increase in Taxes Shifts the IS Curve