Figure 15-1

-Refer to Figure 15-1.Ceteris paribus,an increase in personal income taxes would be represented by a movement from
A) AD₁ to AD₂.
B) AD₂ to AD₁.
C) point A to point B.
D) point B to point A.

Question

Figure 15-1
 
-Refer to Figure 15-1.Ceteris paribus,an increase in personal income taxes would be represented by a movement from
A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) point A to point B. 
D) point B to point A.

Quizplus · Accepted Answer

An increase in personal income taxes would decrease disposable income and therefore decrease consumption. This would shift the AD curve to the left, from AD₂ to AD₁.

Figure 15-1 -Refer to Figure 15-1.Ceteris Paribus,an Increase in Personal Income Taxes