An increase in personal income taxes would shift AD to the:
A) Right because C will increase
B) Left because C will decrease
C) Right because G will increase
D) Left because G will decrease

Question

Quizplus · Accepted Answer

An increase in personal income taxes would decrease disposable income, as individuals have a reduced amount of income after taxation. This would lead to a decrease in consumption spending (C) by households, causing a leftward shift of the aggregate demand (AD) curve.

An Increase in Personal Income Taxes Would Shift AD to The