If Congress raised taxes on businesses, this action would:
A) increase per-unit production costs and thus increase aggregate demand.
B) increase per-unit production costs and thus increase aggregate supply.
C) increase per-unit production costs and thus decrease aggregate supply.
D) increase aggregate demand and increase aggregate supply.

Question

Quizplus · Accepted Answer

Raising taxes on businesses increases their costs, which can lead to a decrease in aggregate supply as businesses may reduce production due to higher expenses.

If Congress Raised Taxes on Businesses, This Action Would