Tax increases
A)and increases in government expenditures shift aggregate demand right.
B)and increases in government expenditures shift aggregate demand left.
C)shift aggregate demand right while increases in government expenditures shift aggregate demand left.
D)shift aggregate demand left while increases in government expenditures shift aggregate demand right.

Question

Quizplus · Accepted Answer

Tax increases decrease disposable income and reduce private consumption spending, which decreases aggregate demand. Therefore, tax increases shift aggregate demand left. However, increases in government expenditures can directly stimulate demand and shift aggregate demand right.

Tax Increases