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TaskStream × W TaskStream x',h 212 Principles o × 39 Interest × PESTLE An. × Secure https://ecourses.pvamu.edu/mod/quiz/attempt.php?attempt-739005&page; 4 eCourses PRAIRIE VIEW A+M HELP × 2017_ECON2123P03-1810-13518 My courses ECON2123P03-1810-13518 / Week 10: Nov 6-10/2123 AD & AS Bonus Point Quiz A Democratic presidential candidate promises to increase business taxes and to increase business regulations. In the AD & AS Model of an economy, an increase in business taxes and business regulations causes ered s out of 1 Select one: a. Aggregate supply to decrease. (The AS curve shifts left/up) b. Aggregate supply to increase. (The AS curve shifts right/down.) c. Aggregate demand to increase. (The AD curve shifts up/right.) d. Aggregate demand to decrease. (The AD curve shifts down/left) Previous page Next page

Explanation / Answer

Option D

The increase in business taxes and business regulations mean that the economy will be negatively effected by the election of the presidential candidate because with the increase in taxes, the corporates might reduce the wages to compensate with the tax increase which will eventually decrease the aggregate demand of the economy as the disposable income will see a fall.

Therefore, the AD curve will move to left as the AD of the economy will decrease

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