Taxes can also influence aggregate demand from "summary" of Principles of Macroeconomics by N. Gregory Mankiw
When the government changes taxes, it affects people's disposable income. Disposable income is the total amount of income that households have available to spend on goods and services after paying taxes. If taxes are decreased, people have more disposable income, and they are likely to spend more on goods and services. This increase in consumption leads to an increase in aggregate demand. Conversely, if taxes are increased, people have less disposable income, and they are likely to spend less on goods and services. This decrease in consumption leads to a decre...
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