If taxes
A)decrease, then consumption decreases, and aggregate demand shifts rightward.
B)decrease, then consumption increases, and aggregate demand shifts leftward.
C)increase, then consumption decreases, and aggregate demand shifts leftward.
D)increase, then consumption increases, and aggregate demand shifts rightward.

Question

Quizplus · Accepted Answer

When taxes increase, disposable income decreases, leading to a decrease in consumption. This reduction in consumption contributes to a leftward shift in aggregate demand, as there is less overall spending in the economy.

If Taxes