Suppose Higher Taxes on Businesses Cause a Decrease in Spending

question 91

Multiple Choice

Suppose higher taxes on businesses cause a decrease in spending on plant and equipment.How will this affect the aggregate expenditure (AE) and the aggregate demand (AD) schedules?

• A)AE shifts up; AD shifts to the left
• B)AE shifts down; AD shifts to the left
• C)AE shifts up; AD shifts to the right
• D)AE shifts down; AD shifts to the right

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Definitions:

Intrauterine

Pertaining to or occurring within the uterus.

Intra-

A prefix meaning within or inside; used in medical and scientific terms to denote something occurring or situated within a specified area.

Within

In the interior or inside part of; enclosed by or lying inside boundaries or limits.

Ecto-

A prefix meaning "outside" or "external," used in biological and medical terminology.