A tax increase
A)increases the quantity of real GDP demanded and there is a movement down along the AD curve.
B)decreases aggregate demand and the AD curve shifts leftward.
C)decreases the quantity of real GDP demanded and there is a movement up along the AD curve.
D)does not shift or lead to a movement along the aggregate demand curve.
E)increases aggregate demand and the AD curve shifts rightward.

Question

Quizplus · Accepted Answer

A tax increase reduces consumers' disposable income, leading to a decrease in consumption and overall aggregate demand, causing the AD curve to shift leftward.

A Tax Increase