When Taxes Decrease, Consumption Increases

question 148

Multiple Choice

When taxes decrease, consumption increases. How is this situation represented in the aggregate demand and aggregate supply model?

• A)by a movement to the right along a given aggregate demand curve
• B)by shifting aggregate demand to the right
• C)by shifting aggregate supply to the right
• D)by a movement to the left along the aggregate demand curve

---

Definitions:

GDP

Gross Domestic Product; the total value of all goods and services produced within a country in a specific time period.

Per Capita

A statistical measure that allows comparison of entities by dividing a total quantity by the population size, indicating average value per person.

Industrial Development

The growth and evolution of industries in a nation or region, characterized by advancements in manufacturing, technology, and infrastructure.

Taiwan

An East Asian island country located off the southeastern coast of China, known for its dynamic economy and vibrant democracy.