If a "liberal" wanted to decrease aggregate demand, which of the following would he or she tend to favor?
A)An increase in government spending, because it will increase the size of the public sector.
B)A decrease in government spending, because it keeps the public sector small.
C)An increase in transfer payments, because it has a larger multiplier than tax changes.
D)An increase in taxes, because it makes the public sector larger.

Question

Quizplus · Accepted Answer

A liberal might favor an increase in taxes to decrease aggregate demand, as it can reduce disposable income and consumption, thus potentially reducing demand.

If a "Liberal" Wanted to Decrease Aggregate Demand, Which of the Following