Taxes reduce total spending
A)directly by increasing government purchases by an equal amount.
B)directly by substituting investment spending.
C)indirectly by reducing government spending.
D)indirectly by reducing disposable income.

Question

Quizplus · Accepted Answer

Taxes reduce disposable income, which indirectly reduces total spending as individuals and households have less money to spend on goods and services.

Taxes Reduce Total Spending