Concept:Fiscal policy shapes demand through taxation and government expenditure.
Explanation:Income tax is a key fiscal policy instrument.
It changes the disposable income available to individuals and households.
A rise in income tax leaves consumers with less money to spend.
This reduces the overall demand for goods and services.
A fall in income tax leaves more disposable income in consumers’ hands.
This increases spending and alters the demand pattern in the economy.
Therefore, income tax is the fiscal instrument that most directly influences the pattern of demand.
Answer:C. income tax