I am trying to understand shifts in the aggregate supply and demand curves.© BrainMass Inc. brainmass.com April 4, 2020, 12:58 am ad1c9bdddf
Hello - I'm happy to answer this question for you.
Let's consider the Aggregate Demand (AD) function first. The first thing to consider is what a tax does to the variables in the aggregate demand curve, which are Consumption (C), Investment (I) and Government (G). A tax on consumer goods is going to decrease consumption, because it ...
This 229 word solution explains how taxes affect aggregate demand and aggregate supply curves.