When taxes increase, consumptiona. decreases, so aggregate demand shifts left. b. increases, so aggregate demand shifts right. c . decreases, so aggregate supply shifts left. d. increases, so aggregate supply shifts right.
1 answer:
Answer:
a. decreases, so aggregate demand shifts left.
Explanation:
When tax is increased, disposable income reduces and therefore consumption falls. The fall in consumption shifts the aggregate demand curve to the left.
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