An increase in taxes will shift the aggregate demand curve to the left.
The entire amount of products and services that consumers are willing to buy in a specific economy and during a specific time period is known as aggregate demand (AD). It is also referred to as a "shift" when aggregate demand changes in a way that modifies its connection with aggregate supply (AS).
When overall consumer spending declines, the aggregate demand curve typically moves to the left. Because of growing living expenses or higher government taxes, consumers may spend less.
If consumers anticipate price increases in the future, they may opt to spend less and save more. It's possible that consumer time preferences shift with time, favoring future consumption over current consumption. A contractionary fiscal strategy may also cause the overall demand to move to the left.
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