How Does the Aggregate Demand and Supply Model Reflect an Increase

question 155

Multiple Choice

How does the aggregate demand and supply model reflect an increase in taxes?

• A) Consumption increases, so aggregate demand shifts right.
• B) Consumption increases, so aggregate supply shifts right.
• C) Consumption decreases, so aggregate demand shifts left.
• D) Consumption decreases, so aggregate supply shifts left.

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Definitions:

Capital Flight

The sudden and large-scale withdrawal of capital or assets from a country due to economic or political instability.

"Brain Drain"

The emigration of highly trained or qualified people from a particular country.

Aggregate Demand

A schedule or curve that shows the total quantity of goods and services that would be demanded (purchased) at various price levels.

World's Output

The total production of all goods and services across all countries in the world.