According to the Keynesian Approach, an Increase in Taxes

question 270

Multiple Choice

According to the Keynesian approach, an increase in taxes

• A) will reduce consumption exactly by the amount of the taxes.
• B) will reduce consumption by an amount less than the change in taxes.
• C) will not impact consumption, as most consumption is autonomous.
• D) will increase consumption, as the government will spend the extra tax revenue and that increases consumption.