When net taxes increase and government purchases decrease,_____.

A) the price level will rise
B) money supply must rise
C) the aggregate demand curve shifts leftward
D) output and employment increase
E) the aggregate supply curve shifts leftward

Net Taxes

Refers to the total amount of taxes collected by the government minus any transfers and subsidies provided by the government to individuals or companies.

Government Purchases

Expenditures by government bodies on goods and services to fulfill their operational needs and to provide public services.

Aggregate Demand Curve

A graph that shows the relationship between the total demand for all goods and services in an economy and the overall price level, typically having a downward slope.