If tax policies become less favorable,then
A)The AD curve will not be affected.
B)There will be a movement to the right along the AD curve.
C)The AD curve will shift to the left.
D)The AD curve will shift to the right.

Question

Quizplus · Accepted Answer

When tax policies become less favorable, it usually means that taxes will increase. This leads to a decrease in disposable income for consumers and a decrease in profits for businesses. As a result, consumers will reduce their spending and businesses will reduce their investments, which will cause a leftward shift in the aggregate demand (AD) curve.

If Tax Policies Become Less Favorable,then