If all variable taxes in the United States were removed and only fixed taxes remained, what would be the effect on the expenditures schedule?
A)The expenditure schedule will shift upward and become steeper.
B)The expenditure schedule will shift upward and become less steep.
C)The expenditure schedule will shift downward and become less steep.
D)The expenditure schedule will shift downward and become steeper.

Question

Quizplus · Accepted Answer

Variable taxes are taxes that change with income, such as income tax. Fixed taxes are taxes that do not change with income, such as property tax. If all variable taxes were removed and only fixed taxes remained, then the expenditure schedule would shift upward and become less steep. This is because people would have more disposable income, which they would spend on goods and services.

If All Variable Taxes in the United States Were Removed