Choice "D" is correct. An increase in the personal income tax will cause a decrease in aggregate demand (i.e., causes the aggregate demand curve to shift left). As a result, an increase in taxes causes real GDP to fall and unemployment to rise.
Choice "b" is incorrect. Real GDP will fall, not rise.
Choice "a" is incorrect. Real GDP will fall, not rise.
Choice "c" is incorrect. Unemployment will rise, not fall.
