Suppose the Government Increases Taxes

question 52

Multiple Choice

Suppose the government increases taxes.One effect of this change is that it decreases

• A) disposable income, which decreases consumption expenditure and aggregate demand.
• B) government expenditure, which decreases aggregate demand.
• C) the size of the government expenditure multiplier.
• D) disposable income which then decreases aggregate supply.

---

Definitions:

Melting Glaciers

The process where glaciers lose ice mass due to increased temperatures, leading to the release of water.

Sediment

Particles of rock and mineral debris that have been transported and deposited by wind, water, or ice.

Terminus

The lower end of a glacier.

Evaporation

The process by which water transforms from a liquid to a gas or vapor, often driven by heat from the sun.