Consumption would decrease, and the aggregate demand curve would shift to the
A) right if taxes increased.
B) right if taxes decreased.
C) left if taxes increased.
D) left if taxes decreased.

Question

Quizplus · Accepted Answer

When taxes increase, people have less disposable income to spend, which decreases consumption. This leads to a decrease in aggregate demand, which shifts the curve to the left.

Consumption Would Decrease, and the Aggregate Demand Curve Would Shift