A lump-sum tax causes the after-tax consumption schedule
A)and the before-tax consumption schedule to coincide.
B)to be steeper than the before-tax consumption schedule.
C)to be flatter than the before-tax consumption schedule.
D)to be parallel to the before-tax consumption schedule.

Question

Quizplus · Accepted Answer

A lump-sum tax reduces disposable income by a fixed amount, shifting the consumption schedule downward but maintaining the same slope, making it parallel to the before-tax consumption schedule.

A Lump-Sum Tax Causes the After-Tax Consumption Schedule