As a result of a tax increase
A) the aggregate demand curve shifts leftward.
B) the aggregate demand curve shifts rightward.
C) the aggregate supply curve shifts leftward.
D) the aggregate supply curve shifts rightward.

Question

Quizplus · Accepted Answer

A tax increase reduces consumers' disposable income, leading to a decrease in consumer spending. This decrease in spending causes the aggregate demand curve to shift leftward.

As a Result of a Tax Increase