Refer to Figure 34-5. An increase in taxes will

A) shift aggregate demand from AD₁ to AD₃.
B) shift aggregate demand from AD₁ to AD₂.
C) cause movement from point C to point D along AD₁.
D) have no effect on aggregate demand.

Question

Fatma Salem · Accepted Answer

Final Answer : B, Explanation :  An increase in taxes reduces consumers' disposable income, leading to a decrease in consumer spending. This decrease in spending shifts the aggregate demand curve to the left, from its initial position to a new position, indicating a reduction in the total demand for goods and services in the economy at every price level.

Refer to Figure 34-5. An increase in taxes will

A) shift aggregate demand from AD₁ to AD₃.
B) shift aggregate demand from AD₁ to AD₂.
C) cause movement from point C to point D along AD₁.
D) have no effect on aggregate demand.

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Learning Objectives

Learning Objectives

Related questions

Refer to Figure 34-5. An increase in taxes willA) shift aggregate demand from AD1 to AD3.B) shift aggregate demand from AD1 to AD2.C) cause movement from point C to point D along AD1.D) have no effect on aggregate demand.

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Figure 34-5. An increase in taxes will

A) shift aggregate demand from AD₁ to AD₃.
B) shift aggregate demand from AD₁ to AD₂.
C) cause movement from point C to point D along AD₁.
D) have no effect on aggregate demand.