A change in net taxes affects the equilibrium quantity of GDP demanded _____
A) in the same way a change in government purchases does.
B) in the same way a change in planned investment does.
C) in the same way a change in net exports does.
D) only indirectly, changing the level of disposable income.
E) in an unpredictable manner.

Question

Quizplus · Accepted Answer

A change in net taxes directly affects disposable income, which in turn affects consumption spending and thereby affecting the equilibrium quantity of GDP demanded. Therefore, it only indirectly affects the equilibrium quantity of GDP demanded.

A Change in Net Taxes Affects the Equilibrium Quantity of GDP