Changes in taxes and government transfers shift the aggregate demand curve _____ government purchases.
A)by more than
B)by exactly as much as
C)by less than
D)in inverse proportion to

Question

Quizplus · Accepted Answer

Changes in taxes and government transfers typically have a smaller direct impact on aggregate demand compared to government purchases, as they first affect disposable income and consumption indirectly.

Changes in Taxes and Government Transfers Shift the Aggregate Demand