Question

When taxes increase, consumptiona. decreases, so aggregate demand shifts left. b. increases, so aggregate demand shifts right. c. decreases, so aggregate supply shifts left. d. increases, so aggregate supply shifts right.

Answer 1

a. decreases, so aggregate demand shifts left.

Step-by-step explanation:

When tax is increased, disposable income reduces and therefore consumption falls. The fall in consumption shifts the aggregate demand curve to the left.

I hope my answer helps you.