Question

Ceteris paribus, if personal taxes are increased, consumer spending will ____________ and the aggregate demand curve will shift to the ______________.

Answer 1

decrease, left

Step-by-step explanation:

In simple words, when the authorities increase personal taxes in the community the disposable income of the individuals decrease. Disposable income refers to the net income that individuals get in hand for their spending on utilities.

Thus, due to less disposable income the spending will decrease which will further lead to decrease in demand, theretofore, shifting the demand curve to the left.