An increase in net taxes at a given price level leads to
A) no change in aggregate demand.
B) an increase in aggregate demand.
C) a decrease in aggregate demand.
D) an increase in aggregate supply.

Question

Quizplus · Accepted Answer

An increase in net taxes means that households and businesses have less disposable income, therefore they will spend less on goods and services, which will lower the aggregate demand.

An Increase in Net Taxes at a Given Price Level