Recall the Application about how society will cope with increased demands for entitlement programs to answer the following question(s). This Application addresses the impact of increasing life expectancy and aging populations on the costs of government entitlement programs such as Social Security, Medicare and Medicaid, and examines several possible solutions to the potential problem.
-According to this Application, one solution proposed to deal with the rising expenses of government entitlement programs is to raise taxes. An increase in taxes to help cover the rising expenses of entitlement programs would
A) increase aggregate demand, shifting the AD curve to the right.
B) increase aggregate demand, shifting the AD curve to the left.
C) decrease aggregate demand, shifting the AD curve to the right.
D) decrease aggregate demand, shifting the AD curve to the left.

Question

Quizplus · Accepted Answer

Raising taxes would decrease disposable income, leading to a decrease in consumer spending, which in turn would decrease aggregate demand, shifting the AD curve to the left.

Recall the Application About How Society Will Cope with Increased