Business High School

when the government increases taxes on individuals, consumption (click to select) and the ad curve (click to select) .

Answers

Answer 1

When the government increases taxes on individuals, consumption tends to decrease and the AD curve tends to shift to the left.

This is because people have less disposable income, leading to a reduction in their purchasing power.

As a result, demand for goods and services declines.

Consequently, the aggregate demand (AD) curve shifts to the left.

This shift represents a decrease in the overall demand for goods and services in the economy, which can potentially lead to slower economic growth and lower employment levels.

In summary, higher taxes on individuals lead to reduced consumption and a leftward shift in the AD curve.

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