A decrease in net taxes:
A)raises aggregate expenditure by raising disposable income,thereby increasing consumption.
B)raises aggregate expenditure by raising disposable income,thereby decreasing consumption.
C)lowers aggregate expenditure by lowering disposable income,thereby decreasing consumption.
D)lowers aggregate expenditure by lowering disposable income,consumption remaining constant.
E)has no effect on aggregate expenditure.

Question

Quizplus · Accepted Answer

A decrease in net taxes increases disposable income, which in turn increases consumption. This results in an increase in aggregate expenditure.

A Decrease in Net Taxes