Pontotoc, Mississippi. Pontotoc is a city in, and the county seat of, Pontotoc County, Mississippi, located to the west of the much larger city of Tupelo. The population was 5,625 at the 2010 census.[1]
Changes in Taxes. The two instruments of fiscal policy are government spending and taxation. A tax increase depresses consumer spending and shifts the aggregate demand curve to the left. A tax cut shifts the aggregate demand curve to the right.The size of these shifts are affected by the multiplier and crowding out effects too, but there is another factor which is important. If households perceive that the tax cut is temporary, it will have a very small impact on aggregate demand.hanges in Taxes. The two instruments of fiscal policy are government spending and taxation. A tax increase depresses consumer spending and shifts the aggregate demand curve to the left. A tax cut shifts the aggregate demand curve to the right.
Extensive study in economics has considered this issue, and theories exist to explain the relationship between taxes and the demand curve. Understanding the basics of the effect of tax on the demand curve is important both for business and those interested in economic policy. Basics of the Demand Curve In economics, the demand curve is a graphical approximation of consumers' buying interest. It is often used hypothetically to help explain and visualize economic theories and phenomena. The points along the demand curve represent price points at which given a quantity of consumers intend to make a purchase. For most products, economists generally assume that the demand curve is decliningâas price increases, consumption quantities will decrease.