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satela [25.4K]
4 years ago
5

An income tax rate increase will most likely ____ aggregate demand and _____ aggregate supply.

Business
1 answer:
egoroff_w [7]4 years ago
7 0

<u>Answer:</u> decrease; decrease

<u>Explanation:</u>

Aggregate demand means the total quantity that would be purchased irrespective of the price levels. Aggregate supply means the total quantity of the goods or services which the firms will sell at a price that is given in the economy. So when the income tax rate increases the aggregate demand and aggregate supply of the products will both decrease.

The increase and decrease in the tax rates brings a shift in the aggregate demand and aggregate supply curve. Other factors which influence these curves are interest rates, income , exchange rates and inflation rates.

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