-Refer to the Figure above.Suppose the government decreases tax rates dramatically in order to decrease the level of employment.We would expect to see aggregate demand shift to the

Question

Quizplus · Accepted Answer

A decrease in tax rates increases disposable income, leading to higher consumption and investment, which shifts aggregate demand to the right. This typically results in higher inflation and lower unemployment, causing a move up the short-run Phillips curve.

-Refer to the Figure Above