What Effect Would Taxation Have on Real Consumption Spending When

question 157

Multiple Choice

What effect would taxation have on real consumption spending when government spending is autonomous?

• A) Taxation reduces real consumption spending.
• B) Taxation increases real consumption spending.
• C) Taxation causes both real consumption spending and planned real saving to increase.
• D) None of the above is correct.

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Definitions:

Semiannual Interest Payment

A type of interest payment made twice a year on bonds or other fixed-income securities.

Journal Entry

A record in accounting that represents a transaction and its effect on various accounts within the financial statements.

Trading Securities

Financial instruments held by a firm for the purpose of short-term profit through trading on a stock exchange.

Sale

The act of selling a product or service in exchange for money or other compensation.