How does a change in autonomous net taxes affect the equilibrium quantity of GDP demanded?
A) in the same way as a change in autonomous government purchases would affect equilibrium quantity of GDP demanded
B) in the same way as a change in autonomous planned investment would affect equilibrium quantity of GDP demanded
C) in the same way as a change in autonomous net exports would affect equilibrium quantity of GDP demanded
D) only indirectly, by first changing the level of disposable income

Question

How does a change in autonomous net taxes affect the equilibrium quantity of GDP demanded?  
A) in the same way as a change in autonomous government purchases would affect equilibrium quantity of GDP demanded 
B) in the same way as a change in autonomous planned investment would affect equilibrium quantity of GDP demanded 
C) in the same way as a change in autonomous net exports would affect equilibrium quantity of GDP demanded 
D) only indirectly, by first changing the level of disposable income

Quizplus · Accepted Answer

A change in autonomous net taxes would affect disposable income, which would then affect consumption and ultimately the equilibrium quantity of GDP demanded. Therefore, the answer is option D, only indirectly, by first changing the level of disposable income.

How Does a Change in Autonomous Net Taxes Affect the Equilibrium