If tax rates in a country increase,________.
A) the GDP of the country will decrease
B) the aggregate price level of the country will rise
C) the country's expenditure on consumption will increase
D) the unemployment rate in the country will fall

Question

Quizplus · Accepted Answer

If tax rates increase, people have less disposable income to spend, causing a decrease in consumption and investment. This reduction in aggregate demand can lead to a decrease in the country's GDP.

If Tax Rates in a Country Increase,________