Answer the Question on the Basis of the Following Data

question 83

Multiple Choice

Answer the question on the basis of the following data: $\begin{array}{cc}\underline{\text { After-Tax Income} } &\underline{ \text { Consumption }} \\\$ 1,000 & \$ 900 \\2,000 & 1,800 \\3,000 & 2,700 \\4,000 & 3,600 \\5,000 & 4,500\end{array}$ The data suggest that:

• A) consumption varies inversely with after-tax income.
• B) consumption varies directly with after-tax income.
• C) consumption and after-tax income are unrelated.
• D) a tax increase will increase consumption.

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Definitions:

Lottery

A form of gambling involving the drawing of numbers for a prize.

Winnings

Refers to the money or prizes earned from gambling, contests, or competitions.

Corporate Bond

A debt security issued by a corporation to raise funding. It obligates the issuer to pay interest and repay the principal at a later date.

Bondholder

An individual or entity that owns bonds issued by corporations, governments, or other institutions, which means they have lent money to the issuer in exchange for interest payments and the return of principal at maturity.