A change in a fixed tax will cause the consumption schedule to
A)become steeper.
B)become flatter.
C)shift in a parallel manner.
D)remain fixed as the economy moves along the schedule.

Question

Quizplus · Accepted Answer

A fixed tax does not affect the slope (steepness or flatness) of the consumption schedule, but it will cause a parallel shift. An increase in the fixed tax will shift the consumption schedule downward (to the left), while a decrease in the fixed tax will shift the consumption schedule upward (to the right).

A Change in a Fixed Tax Will Cause the Consumption