In 1968, the government instituted a 26 percent income tax surcharge. In terms of the AS/AD model, this change should have:

Question

Quizplus · Accepted Answer

An increase in income tax reduces consumers' disposable income, leading to a decrease in consumer spending. This decrease in spending would shift the Aggregate Demand (AD) curve to the left in the AS/AD model, as it represents a reduction in the overall demand for goods and services in the economy.

In 1968, the Government Instituted a 26 Percent Income Tax