In an economic FRQ, if you are asked to evaluate the impact of a tax increase on consumer spending, which of the following steps should you identify first to construct a well-rounded response?

When you are asked to evaluate the impact of a tax increase on consumer spending, the first step is to identify what the tax increase means for consumers. A tax increase typically means that consumers have less disposable income because they have to pay more money to the government. With less money to spend, people may buy fewer goods and services, which can lead to a decrease in overall consumer spending. For example, if a family's income tax goes up, they might decide to cut back on dining out or shopping for new clothes. By understanding this relationship, you can then explain how reduced consumer spending can affect businesses and the economy as a whole.