Which of the following fiscal policies would cause a decrease in aggregate expenditures?

Question

Quizplus · Accepted Answer

An increase in taxes and a decrease in government spending both lead to a decrease in disposable income, which in turn leads to a decrease in consumption and therefore, a decrease in aggregate expenditures. On the other hand, options A, B and C all involve policies that would increase disposable income and/or government spending, leading to an increase in aggregate expenditures.

Which of the Following Fiscal Policies Would Cause a Decrease