When net taxes increase and government purchases decrease,_____.
A)the price level will rise
B)money supply must rise
C)the aggregate demand curve shifts leftward
D)output and employment increase
E)the aggregate supply curve shifts leftward

Question

Quizplus · Accepted Answer

When net taxes increase and government purchases decrease, it means that there is a reduction in government spending which results in a decrease in aggregate demand as consumers have less disposable income to spend. This shift in government policy will cause the aggregate demand curve to shift leftward.

When Net Taxes Increase and Government Purchases Decrease,_____