When taxes increase,consumption
A)decreases as shown by a movement to the left along a given aggregate demand curve.
B)decreases as shown by shifting aggregate demand to the left.
C)increases as shown by shifting aggregate supply the left.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

When taxes increase, consumers have less disposable income, leading to a decrease in consumption. This decrease in consumption results in a leftward shift of the aggregate demand curve.

When Taxes Increase,consumption