and Aggregate Demand goes 18If Taxes go up Disposable Incom

, and Aggregate Demand goes 18.If Taxes go up, Disposable Income goes 19. If Taxes go down, Disposable income goes and Aggregate Demand goes 20. If interest rates go up, Investment goes 21. If interest rates go down, Investment goesand Aggregate Demand goes and Aggregate Demand goes

Solution

18. If there is an increase in the taxes and it would reduce the disposable income of the people, so if the people have a low disposable income they cosume less and there will be reduction in the consumption. Since the consumption is a componenet of the aggregate demand the decrease in the consumption will reduce the aggregate demand.

If the taxes go up, the disposable income goes decreasing and the aggregate demand goes declining.

19. If the taxes goes down it will increase the disposable income of the people so they consume more and this results in an increase in the aggregate demand.

If the taxes goes down, the disposable income goes increasing and the aggreagte demand goes increasing.

20. The interest rate is the cost of borrowing money so if there is a higher interest rate individuals and business will borrow less and this will negatively affect the investment in the country and this inturn results in a decrease in the aggregate demand.

If the interest rate goes up, the investment will decline and the aggregate demand goes decreasing.

21. If the interest rate is low, the cost of borrowing money is less and the individuals and business will borrow more money and this induces the investment and inturn results in an increase in the aggaregate demand.

If the interest rate goes down, the investment will increase and the aggregate demand will also increase.