An autonomous net tax will
A)decrease disposable income by the same amount regardless of the level of real GDP
B)increase disposable income by the same amount regardless of the level of real GDP
C)decrease disposable income by more than it increases real GDP
D)increase disposable income by more than it increases real GDP
E)have no effect on disposable income at some levels of real GDP

Question

Quizplus · Accepted Answer

An autonomous net tax is a tax that is independent of changes in income or output. It reduces disposable income by the same amount regardless of the level of real GDP, leading to a downward shift in the consumption function and a decrease in equilibrium output. Therefore, it decreases disposable income by the same amount regardless of the level of real GDP.

An Autonomous Net Tax Will