During recessions, what do taxes tend to do, and to what effect?
A) They rise and so shift aggregate demand right.
B) They rise and so shift aggregate demand left.
C) They fall and so shift aggregate demand right.
D) They fall and so shift aggregate demand left.

Question

Quizplus · Accepted Answer

During recessions, governments often reduce taxes to stimulate economic activity, which shifts aggregate demand to the right.

During Recessions, What Do Taxes Tend to Do, and to What