If personal income taxes decrease,

consumption spending decreases and aggregate demand shifts to the left

investment spending increases and aggregate demand shifts to the right

investment spending decreases and aggregate demand shifts to the left

consumption spending increases and aggregate demand shifts to the right

Solutions

Expert Solution

Option 4

If people will have to pay lower taxes, they will have more liquidity to pay spend. Therefore, the consumption increases and the aggregate demand curve will also shift to the right.

Rahul Sunny answered 1 year ago

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