Which of the following policies will shift the AD curve to the LEFT?
A) The government spends more.
B) The government raises tax rates.
C) The Bank of Canada increases the money supply.
D) The government cuts tax rates.

Question

Quizplus · Accepted Answer

When the government raises tax rates, individuals and businesses will have less disposable income, which will decrease their consumption and investment spending. This will lead to a decrease in aggregate demand, causing the AD curve to shift to the left.

Which of the Following Policies Will Shift the AD Curve