Tax Increases on Business Income Decrease Aggregate Demand by Decreasing

question 287

Multiple Choice

Tax increases on business income decrease aggregate demand by decreasing

• A)business investment spending.
• B)consumption spending.
• C)government spending.
• D)wage rates.
• E)net exports.

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Definitions:

Buyer Surplus

Buyer surplus is the difference between the maximum amount a consumer is willing to pay for a good or service and the actual amount paid.

Producer Surplus

The difference between the amount producers are willing to supply a good for and the actual amount they receive (or market price).

Minimum Price

The lowest possible price at which a product or service can be sold, often regulated by governments to protect producers or consumers.

Buyer Surplus

The difference between the highest price a consumer is willing to pay for a good or service and the actual price they pay.