Question
Graphical treatment of taxes and fiscal policy The main difference between variable taxes and fixed taxes is that unlike variable taxes, fixed taxes do not
Graphical treatment of taxes and fiscal policy
The main difference between variable taxes and fixed taxes is that unlike variable taxes, fixed taxesdo not vary with GDP .
The following graph shows the consumption schedule for an economy with a given level of taxes. Suppose the government implements a tax increase through a variable tax.
Use two green points (triangle symbol) to connect the two black points (plus symbols) representing the consumption schedule after the change in taxes.
Hint: The new consumption schedule must pass through one point on the left and one point on the right.
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668a60b4b3d34_756668a60b463e88.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/668a60b55fbfb_757668a60b516403.jpg)
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