(Advanced analysis)Answer the question on the basis of the following before-tax consumption schedule for an economy: $\begin{array}{l}
\text { Gross Domestic }\
\begin{array} { c c }
\underline{\text { Product (GDP)} } & \underline{\text { Consumption (C)} } \
\$ 100 & \$ 140 \
200 & 200 \
300 & 260 \
400 & 320 \
500 & 380
\end{array}
\end{array}$ Refer to the data.A 10 percent proportional tax on income would:

Question

(Advanced analysis)Answer the question on the basis of the following before-tax consumption schedule for an economy: $\begin{array}{l}
\text { Gross Domestic }\
\begin{array} { c c } 
\underline{\text { Product (GDP)} } & \underline{\text { Consumption (C)} } \
 \$ 100 & \$ 140 \
200 & 200 \
300 & 260 \
400 & 320 \
500 & 380
\end{array}
\end{array}$ Refer to the data.A 10 percent proportional tax on income would:

Quizplus · Accepted Answer

A 10 percent proportional tax on income would decrease disposable income, resulting in a decrease in consumption expenditures at each level of income. This would lead to a lower value of the consumption multiplier and a decrease in the size of the multiplier, making the economy less sensitive to changes in autonomous expenditures and more stable overall.

(Advanced Analysis)Answer the Question on the Basis of the Following