Macroeconomics

If there is a decrease in personal taxes the correct sequence of events is

a. a decrease in taxes

Question

If there is a decrease in personal taxes, the correct sequence of events is

a. a decrease in taxes

increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and price level.

b. a decrease in taxes increases disposable income which shifts AD to the right increasing output and decreasing price level.

c. a decrease in taxes shifts AD to the right increasing output and price level.

d. a decrease in taxes increases consumer spending which shifts AD to the right increasing output and price level.

e. a decrease in taxes increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and decreasing price level.

Macroeconomics

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