It is false that other things the same, an increase in taxes shifts aggregate demand to the left and in the short run this makes output fall which makes the interest rate rise.
An increase in income taxes decreases the disposable income for individuals, which in turn lowers consumption (but by less than the change in disposable personal income).
This causes a left shift in the aggregate demand curve which is equal to the initial change in consumption caused by the change in income tax multiplied by the multiplier.
In the aggregate demand and supply model, an increase in the tax rate will cause the aggregate demand curve to shift to the left by an amount equivalent to the initial shift in aggregate spending which is brought on by the rise in the tax rate multiplied by the new multiplier value.
To know more about 'aggregate demand' related questions
visit- https://brainly.com/question/29349235
#SPJ4
