Use the Graphs Below to Answer the Following Questions

question 25

Essay

Use the graphs below to answer the following questions: (a) What types of schedules do graphs A and B represent?
(b) If in graph A line A2 shifts to A3 because households consume more and this change is not due to changing taxes, then what would happen to line B2 in graph B?
(c) If in graph B, line B2 shifts to B1 because households save less, then what will happen to line A2 in graph A?
(d) In graph A, what has caused the movement from point A to point B on line A2?
(e) If there is a lump-sum tax increase causing line A2 to shift to A1, then in graph B, what will happen to B2?

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