A change in taxes shifts the aggregate demand curve by _____ than a change in government spending for goods and services and has a _____ effect on real GDP.
A)more; smaller
B)more; larger
C)less; smaller
D)less; larger

Question

Quizplus · Accepted Answer

A change in taxes typically has a less direct impact on aggregate demand compared to government spending, leading to a smaller effect on real GDP.

A Change in Taxes Shifts the Aggregate Demand Curve by _____