Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The tax increase will decrease disposable income, leading to a reduction in consumer spending.
B
Consumers will be unhappy with higher taxes.
C
The government needs to collect more taxes.
D
People spend money on various goods.
Understanding the Answer
Let's break down why this is correct
Answer
When explaining the impact of a tax increase on consumer spending, it's important to break down how higher taxes affect people's money and choices. When taxes go up, individuals have less disposable income, meaning they have less money to spend on goods and services. For example, if a family has to pay more in taxes, they might decide to cut back on dining out or buying new clothes. This decrease in spending can lead to lower sales for businesses, which may then affect their ability to hire or pay employees. Overall, a tax increase can lead to reduced consumer spending, which has a ripple effect on the economy.
Detailed Explanation
A tax increase means people have less money to spend. Other options are incorrect because Saying consumers will be unhappy focuses on feelings, not the actual effect on spending; This answer talks about the government's needs, not how taxes affect spending.
Key Concepts
Task verbs in FRQs
Economic impact of tax changes
Consumer behavior
Topic
Understanding Task Verbs in FRQs
Difficulty
easy level question
Cognitive Level
understand
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