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Introduction to Fiscal Policy
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Introduction to Fiscal Policy
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20. Fiscal Policy / Introduction to Fiscal Policy / Problem 5
Problem 5
If a government increases taxes, what is the expected impact on disposable income and consumption?
A
Disposable income decreases, leading to lower consumption.
B
Disposable income remains unchanged, having no effect on consumption.
C
Disposable income decreases, but consumption remains unchanged.
D
Disposable income increases, leading to higher consumption.
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