What is the impact on disposable income and consumption when taxes are increased?
A)Disposable income increases, leading to a decrease in consumption.
B)Disposable income decreases, leading to a decrease in consumption.
C)Disposable income decreases, leading to an increase in consumption.
D)Disposable income increases, leading to an increase in consumption.

Question

Quizplus · Accepted Answer

When taxes are increased, disposable income decreases as individuals have less money available to spend after paying taxes. This leads to a decrease in consumption as individuals have lower purchasing power.

What Is the Impact on Disposable Income and Consumption When