Using graphs of the consumption function, show how consumption reacts to each of these factors.
(a) Taxes fall in the economy.
(b) The income effect of a rise in interest rates outweighs the substitution effect.
(c) Consumers expect future incomes to fall.

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The Answer of Using graphs of the consumption function, show how consumption reacts to each of these factors.
(a) Taxes fall in the economy.
(b) The income effect of a rise in interest rates outweighs the substitution effect.
(c) Consumers expect future incomes to fall.

Using Graphs of the Consumption Function, Show How Consumption Reacts