-Refer to Figure 11-3.Which of the following could explain the shift from C₁ to C₂?
A) An increase in disposable income
B) An increase in net taxes that increases the marginal propensity to consume
C) A decrease in net taxes that increases the marginal propensity to consume
D) An increase in net taxes that increases autonomous consumption spending
E) A decrease in net taxes that increases autonomous consumption spending.

Question

-Refer to Figure 11-3.Which of the following could explain the shift from C₁ to C₂?
A) An increase in disposable income 
B) An increase in net taxes that increases the marginal propensity to consume 
C) A decrease in net taxes that increases the marginal propensity to consume 
D) An increase in net taxes that increases autonomous consumption spending 
E) A decrease in net taxes that increases autonomous consumption spending.

Quizplus · Accepted Answer

A decrease in net taxes can increase autonomous consumption spending, leading to a shift from C₁ to C₂.