In which case can we be sure aggregate demand shifts left overall?
A)people want to save more for retirement and the government raises taxes
B)people want to save more for retirement and the government cuts taxes
C)people want to save less for retirement and the government raises taxes
D)people want to save less for retirement and the government cuts taxes

Question

Quizplus · Accepted Answer

When people want to save more for retirement and the government raises taxes, it reduces disposable income and leads to a decrease in consumer spending, therefore shifting the aggregate demand left.

In Which Case Can We Be Sure Aggregate Demand Shifts