How does a change in taxes primarily affect aggregate demand?

Question

Quizplus · Accepted Answer

A change in taxes primarily affects aggregate demand through its impact on disposable income and consumption spending. When taxes are increased, consumers have less disposable income and are likely to decrease their consumption. As a result, aggregate demand declines. Conversely, if taxes are decreased, consumers have more disposable income and are likely to increase their consumption, leading to an increase in aggregate demand.

How Does a Change in Taxes Primarily Affect Aggregate Demand