Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Consumer spending increases
B
Consumer spending decreases
C
Consumer spending remains unchanged
D
Consumer spending is reallocated to luxury goods
Understanding the Answer
Let's break down why this is correct
Answer
When the tax burden increases, consumers often have less money to spend because a larger portion of their income goes to taxes. This can make them more cautious about their purchases, leading them to buy less or choose cheaper options. For example, if people have to pay higher income taxes, they might decide to skip going out to eat or delay buying a new phone. As a result, businesses may see a drop in sales, which can eventually affect their ability to hire or pay employees. Overall, higher taxes can slow down consumer spending, which is important for the economy.
Detailed Explanation
When taxes go up, people have less money to spend. Other options are incorrect because Some might think higher taxes mean people spend more to keep up; It's a common belief that taxes don't change spending.
Key Concepts
consumer behavior
Topic
Tax Burden and Consumer Behavior
Difficulty
easy level question
Cognitive Level
understand
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