When government increases a fixed tax, consumption schedule
A)shifts downward in a parallel manner.
B)shifts upward in a parallel manner.
C)becomes horizontal.
D)becomes vertical.

Question

Quizplus · Accepted Answer

When government increases a fixed tax, consumers have less disposable income to spend on goods and services. As a result, the consumption schedule shifts downward in a parallel manner. This is because each level of income now allows for less spending due to the increased tax burden.

When Government Increases a Fixed Tax, Consumption Schedule