What Effect Would an Increase in Business Tax Rates,combined with a Decrease

question 159

Multiple Choice

What effect would an increase in business tax rates,combined with a decrease in consumer confidence,have on aggregate demand (AD) ?

• A)AD would increase.
• B)AD could either increase or decrease, depending on which change was of a greater magnitude.
• C)AD would decrease.
• D)AD would stay the same.

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Definitions:

Primary Market

The financial market for new securities issues, where companies sell new stocks and bonds to the public for the first time.

Secondary Market

A marketplace where investors buy and sell securities or assets from other investors, rather than from issuing companies.

Minimum Wage Law

Legislation that sets the lowest hourly wage rate that employers can legally pay their workers.

Price

The amount of money expected, required, or given in payment for something. It serves as a signal between buyers and sellers in a market.