A decrease in net taxes
A)raises aggregate expenditure by raising disposable income,thereby increasing consumption
B)raises aggregate expenditure by raising disposable income,thereby decreasing consumption
C)lowers aggregate expenditure by lowering disposable income,thereby decreasing consumption
D)lowers aggregate expenditure by lowering disposable income,thereby increasing consumption
E)has no effect on aggregate expenditure

Question

Quizplus · Accepted Answer

When net taxes decrease, disposable income increases, which leads to an increase in consumption spending. This increase in consumption leads to an increase in aggregate expenditure, making choice A the best answer.

A Decrease in Net Taxes