Answer to Question #90517 in Macroeconomics for Sung Eun Seok

Question

8. The increase in business taxes would tend to:
A. increase aggregate demand and decrease aggregate supply
B. increase aggregate demand and increase aggregate supply
C. decrease aggregate demand and increase aggregate supply
D. decrease aggregate demand and decrease aggregate supply

Answer 1

The increase in business taxes will increase costs of firms and prices of goods. As result - decrease aggregate demand and decrease aggregate supply.

Answer - d.