0
How would an increase in net taxes affect the consumption function?
Wiki User
∙ 11y agoWant this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
What will an increase in taxes on consumers most likely cause?
This depends on what type of tax it is, lump sum or marginal.Lump sum: a lump sum consumption tax would not affect the general level or composition of consumption because fixed quantities do not affect optimal consumption-savings decisions.Marginal tax: if the marginal tax increased (i.e.) a general sales tax increase), it would decrease overall consumption because the tax would be an increase in the cost of consuming, and thus encourage the consumer to save more money and consume less.
Why does an increase in autonomous taxes have the same effect on equilibrium output as does an decrease in autonomous transfers?
taxes indirectly decrease Y, it does this by decreasing consumption
What are the taxes on production transportation sale or consumption of goods?
Excise Taxes.
Which of the following statements best explains the effects of transfer payments and taxes on aggregate spending?
Transfer payments and taxes affect aggregate spending indirectly by first changing disposable income and thereby changing consumption.
Why doesn't an increase in taxes change slope LM curve when a change in taxes changes which changes consumption which changes national income which changes Y and LM slope equals (k/h)Y?
... doesn't change slope :/ solved lol
How is fiscal policy controlled?
Taxes, and government spending. Increasing taxes will decrease consumption and supply. Lowering taxes will increase consumption and supply. Increasing government spending will increase national consumption, and decreasing government spending will decrease national consumption. The economics AD-AS model shows a visual representation of the effects of fiscal policy on the economy if you are further interested.
What will an increase in taxes on consumers most likely cause?
This depends on what type of tax it is, lump sum or marginal.Lump sum: a lump sum consumption tax would not affect the general level or composition of consumption because fixed quantities do not affect optimal consumption-savings decisions.Marginal tax: if the marginal tax increased (i.e.) a general sales tax increase), it would decrease overall consumption because the tax would be an increase in the cost of consuming, and thus encourage the consumer to save more money and consume less.
When taxes decrease what does consumption do?
When taxes decrease, consumption
Why does an increase in autonomous taxes have the same effect on equilibrium output as does an decrease in autonomous transfers?
taxes indirectly decrease Y, it does this by decreasing consumption
What are the taxes on production transportation sale or consumption of goods?
Excise Taxes.
What will increased consumer spending?
Consumer spending is called consumption, which is a component of Aggregate Demand in our economy. In monetary policy, the Federal Reserve can buy treasuries, lower the reserve requirement, and lower the discount rate which will increase consumption. In fiscal policy, the government can cut taxes to increase consumer spending.
Which of the following statements best explains the effects of transfer payments and taxes on aggregate spending?
Transfer payments and taxes affect aggregate spending indirectly by first changing disposable income and thereby changing consumption.
What is the explanation for the factors affecting consumption?
There are many different factors that affect a consumers consumption. Taxes are one example. To a consumer who likes tp spend or "borrow" high taxes are bad because income falls reducing their tendency to spend. If a consumer is a saver then increase to taxes will likely increase their choice to save, being a saver and not so much a consumer.Economic factors also affect consumer such as the stock market. Today we see S&P and NYSE lows around 1997 levels. This lack of "consumer confidence" causes a change in consumption. More specifically, there is a lack of consumption or a decrease in consumption because people are more incline to become savers seeing that their money is depreciating in the stock market. However stock market troubles are a person by person basis. One consumer may see a stagnant stock market as an opportunity to make a profit on low stocks. Their individual consumption may rise while other consumers consumption falls. However, the common consensus in a falling stock market like the one in today's recession is to hold onto money and stock consuming.
What kind of taxes are consumption collected as?
Sales.
What is Income not spent on current consumption or taxes is?
saving
What would most likely occur if the government's priority was to increase government expenditures?
increase taxesincrease taxesincrease taxes.
Which of these taxes is paid by the consumer when a product is purchased?
consumption
