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Economics (AS & A Level) · Feb / March 2024 · Paper 12 · Question 22

9708Aggregate Demand and Aggregate Supply analysis

The diagram shows aggregate demand (AD) curves for an economy. Which combination is most likely to have caused the shift from AD1 to AD2?

  1. Adecrease income tax; decrease sales tax
  2. Bdecrease income tax; increase sales tax
  3. Cincrease income tax; decrease sales tax
  4. Dincrease income tax; increase sales tax

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Correct answer: D. increase income tax; increase sales tax

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