Which of the following describes the effects of an autonomous net taxes decrease?
A) Disposable income increases, consumption decreases, and saving decreases.
B) Disposable income increases, consumption increases, and saving increases.
C) Disposable income decreases, consumption decreases, and saving decreases.
D) Disposable income decreases, consumption increases, and saving increases.

Question

Which of the following describes the effects of an autonomous net taxes decrease?  
A) Disposable income increases, consumption decreases, and saving decreases. 
B) Disposable income increases, consumption increases, and saving increases. 
C) Disposable income decreases, consumption decreases, and saving decreases. 
D) Disposable income decreases, consumption increases, and saving increases.

Quizplus · Accepted Answer

An autonomous net taxes decrease means taxes have decreased without any change in government spending or transfer payments. This increases disposable income which in turn increases consumption and savings. Therefore, option B is the correct choice.

Which of the Following Describes the Effects of an Autonomous