-Refer to the above graph to answer this question.If autonomous taxes were to increase,what would be the result?
A)The AE curve would shift up parallel and the equilibrium level of income would increase.
B)The AE curve would shift up parallel and the equilibrium level of income would decrease.
C)The AE curve would shift down parallel and the equilibrium level of income would increase.
D)The AE curve would shift down parallel and the equilibrium level of income would decrease.

Question

-Refer to the above graph to answer this question.If autonomous taxes were to increase,what would be the result?
A)The AE curve would shift up parallel and the equilibrium level of income would increase. 
B)The AE curve would shift up parallel and the equilibrium level of income would decrease. 
C)The AE curve would shift down parallel and the equilibrium level of income would increase. 
D)The AE curve would shift down parallel and the equilibrium level of income would decrease.

Quizplus · Accepted Answer

An increase in autonomous taxes would decrease disposable income, leading to a decrease in consumption. This would shift the Aggregate Expenditure (AE) curve downward, resulting in a lower equilibrium level of income.

-Refer to the Above Graph to Answer This Question