How Do Changes in Income Tax Policies Affect Aggregate Demand

question 272

Multiple Choice

How do changes in income tax policies affect aggregate demand?

• A)Higher taxes increase disposable income,consumption,and aggregate demand.
• B)Higher taxes reduce disposable income,consumption,and aggregate demand.
• C)Higher taxes increase corporate investment and aggregate demand.
• D)Higher taxes increase aggregate supply and thus increase aggregate demand as well.

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Definitions:

Cyclohexanone

A six-membered cyclic ketone, used as a solvent and in the synthesis of nylon and other polymers.

1,2-Halohydrin

A compound containing a halogen and a hydroxyl group on adjacent carbon atoms, typically formed by the halogen addition to alkenes.

Epoxide

An organic compound containing an oxygen atom connected to two adjacent carbon atoms in a cyclic ether structure.

Electrophilic Addition

A type of chemical reaction where an electrophile forms a bond with a nucleophile by adding to a double or triple bond.