An increase in individual income taxes, ceteris paribus: a Raises aggregate expe

Question

An increase in individual income taxes, ceteris paribus:
a Raises aggregate expenditure by raising disposable income, thereby increasing consumption
b Has no effect on aggregate expenditure
c Lowers aggregate expenditure by lowering disposable income, thereby increasing consumption
Although levied on the corporation, the incidence of the corporate income tax may be borne by:
a. the stockholders only
b. The stockholders and resource suppliers only
c. The stockholders and consumers only
d. The stockholders, the consumers, and even the resource suppliers, if for example the company could not push the tax forward and had to reduce output and wage rates.

Explanation / Answer

c) but wouldn't lowering disposable income decrease consumption? d) there is less profit to the shareholders, the consumers pay higher prices, and resource suppliers get fewer orders.

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