Figure 15-1 -Refer to Figure 15-1.Ceteris paribus,an increase in personal income taxes would be represented by a movement from A)AD₁ to AD₂. B)AD₂ to AD₁. C)point A to point B. D)point B to point A.

Question

Quizplus · Accepted Answer

An increase in personal income taxes means that consumers have less disposable income, leading to a decrease in consumption expenditure (C) and a shift of the AD curve to the left. This is represented by a movement from AD₂ to AD₁, as shown in the graph.

Figure 15-1 -Refer to Figure 15-1.Ceteris Paribus,an Increase in Personal Income Taxes