A key issue in the presidential election of 2012 between President Obama and Mr. Romney concerned tax rates. President Obama favored increasing taxes, especially on the rich. 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

Increasing taxes, especially on the rich, would lead to a decrease in disposable income, reducing consumption and investment. This decrease in consumption and investment would lead to a leftward shift in the aggregate demand curve.

A Key Issue in the Presidential Election of 2012 Between