If Taxes Are Increased, the AD Curve

question 163

Multiple Choice

If taxes are increased, the AD curve

• A) is not affected because a change in taxes is a nominal change not real change.
• B) does not shift but there is a movement down along the curve.
• C) shifts rightward and aggregate demand decreases.
• D) shifts leftward and aggregate demand decreases.

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Definitions:

Government Ownership

The possession and control over enterprises and assets by the state or government, rather than private individuals or organizations.

Federal Government

The federal government refers to the national government of a country that is responsible for enacting and enforcing laws, collecting taxes, and managing the country’s affairs.

Defense Spending

Government expenditure on military forces and activities, including salaries, benefits, weapons systems, and operations.

Social Security

A government program that provides financial assistance to people with inadequate or no income, particularly the elderly, disabled, and families with dependent children.