Which of the following statements is FALSE?
A)Taxes and transfer payments affect aggregate demand by changing disposable income.
B)Fiscal policy is the attempt to influence the economy using taxes, transfer payments and government expenditures.
C)An increase in disposable income leads to a decrease in aggregate demand.
D)Government expenditure affects aggregate demand directly because government expenditure is a component of aggregate demand.

Question

Quizplus · Accepted Answer

An increase in disposable income typically leads to an increase in aggregate demand, not a decrease, as consumers have more income to spend.

Which of the Following Statements Is FALSE