The above data suggest that:
A)consumption varies inversely with after-tax income.
B)consumption varies directly with after-tax income.
C)consumption and after-tax income are unrelated.
D)a tax increase will increase consumption.

Question

The above data suggest that:
A)consumption varies inversely with after-tax income. 
B)consumption varies directly with after-tax income. 
C)consumption and after-tax income are unrelated. 
D)a tax increase will increase consumption.

Quizplus · Accepted Answer

The data suggest that there is a direct relationship between consumption and after-tax income, as consumption increases as after-tax income increases. This can be seen in the positive correlation coefficient between the two variables. Option A is incorrect because the data shows an inverse correlation between taxes and consumption, not between consumption and after-tax income. Option C is incorrect because the data suggests a clear relationship between the two variables. Option D contradicts the actual data as an increase in taxes would likely result in a decrease in consumption.

The Above Data Suggest That