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Sagot :
The net effect of the government increasing the taxes by $10 billion at the same time that it decreased spending by $5 billion will be decreasing aggregate demand by $40 billion.
Main purpose of Tax
Tax is an amount that is levied on the annual income or the profits of any person which is directly paid to the government. Everyone who earns any kind of income is liable to pay income tax. The main purpose of tax is to raise income for the government which can lead to higher spending on health care and education.
Result of increase in tax
An increase in taxes impact on the economy negatively because it discourages consumer spending. Also, high tax rates cause lower real tax revenue collection.
Thus, the net effect of the government increasing the taxes by $10 billion at the same time that it decreased spending by $5 billion will be decreasing aggregate demand by $40 billion.
Learn more about taxes here- brainly.com/question/27693139
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