Figure 11-3

-In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the personal income tax?
A) C1 in graph (a)
B) C2 in graph (a)
C) C1 in graph (b)
D) C2 in graph (b)

Question

Figure 11-3
 
-In Figure 11-3,which line represents the change in the consumption schedule caused by an increase in the personal income tax?
A) C1 in graph (a) 
B) C2 in graph (a) 
C) C1 in graph (b) 
D) C2 in graph (b)

Quizplus · Accepted Answer

An increase in personal income tax would lead to a decrease in disposable income, which would shift the consumption schedule downward. This is represented by the shift from C1 to C2 in graph (b), indicating a decrease in consumer spending at every level of disposable income. The other graphs do not show a downward shift in the consumption schedule caused by an increase in personal income tax.

Figure 11-3 -In Figure 11-3,which Line Represents the Change in the Consumption