An Increase in U.S. Taxes

Read the article here.

This article explains how the taxes in the United States have increased over the few years. If such things happen, it will make an affect on the economy’s aggregate demand curve. The AD curve will shift to the left, and this is because if the tax rate goes up, that means that there is less money for the consumers to have less disposable income, and would demand less than they used to. If the AD curve shifts to the left as shown in Figure 1, then the price levels would increase from P1 to P2, and the real GDP would decrease from Y1 to Y2. Such impact on the AD curve would be an immediate effect; however on the long term, the aggregate supply curve may also be

affected because once the AD curve shifts left, meaning that there is a fewer demand, the producers would not produce more of the goods and services, and so eventually the AS curve may also shift left. This increase in tax is a great impact on both the AD and the AS because taxes play a large role in the prices of many goods and services.

Advertisements
This entry was posted in Economics, Section 3. Bookmark the permalink.

One Response to An Increase in U.S. Taxes

  1. Pingback: Portfolio Semester 2 | Kanako's Blog

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s