Answered

Which of the following will
result from an increase in
taxation?
A. an increase of aggregate demand
B. a decrease of interest rates
C. a decrease of aggregate demand
D. an increase of interest rates

Verified Answer :

GinnyAnswer

Final answer:

An increase in taxation decreases aggregate demand and increases interest rates.


Explanation:

An increase in taxation will result in a decrease of aggregate demand. This is because higher taxes reduce consumers' disposable income, leading to lower spending, which in turn decreases overall demand for goods and services.

Additionally, a decrease in aggregate demand will likely increase interest rates. When demand for goods and services decreases, the overall economy slows down, leading to a higher cost of borrowing money.

Therefore, an increase in taxation will have a dual effect of lowering aggregate demand and increasing interest rates.


Learn more about taxation, aggregate demand, interest rates here:

https://brainly.com/question/34048229

Answer:

C. a decrease of aggregate demand

Explanation:

An increase in taxation typically leads to a decrease in disposable income for individuals and businesses. This reduction in disposable income tends to decrease consumer spending and investment, which in turn lowers aggregate demand.

Therefore, the correct answer is: C. a decrease of aggregate demand

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