Question

What will be impact of an income tax increase on an economy's consumption spending, real output, and unemployment in the short run?
Consumption will decrease, real output will decrease, and unemployment will increase.
Consumption will increase, real output will increase, and unemployment will decrease.
Consumption will increase, real output will decrease, and unemployment will increase.
Consumption will increase, real output will increase, and unemployment will decrease.
Consumption will decrease, real output will decrease, and unemployment will decrease.

Answer 1

Consumption will decrease, real output will decrease, and unemployment will increase.