A tax hike ________ aggregate demand and ________ aggregate supply.
A)increases;increases
B)increases;decreases
C)decreases;increases
D)decreases;decreases
E)does not change;increases

Question

Quizplus · Accepted Answer

A tax hike decreases aggregate demand because it reduces consumers' disposable income, leading to lower consumption. It also decreases aggregate supply as businesses face higher costs, reducing their ability to produce goods and services.

A Tax Hike ________ Aggregate Demand and ________ Aggregate Supply

A Tax Hike Aggregate Demand and Aggregate Supply