ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Consumption increases as current income increases, and the larger the marginal propensity to consume, the more sensitive current spending is to current disposable income. The smaller the marginal propensity to consume, the stronger is the consumption-smoothing effect.

Detailed explanation-2: -An increase in income taxes reduces disposable personal income and thus reduces consumption (but by less than the change in disposable personal income). That shifts the aggregate demand curve leftward by an amount equal to the initial change in consumption that the change in income taxes produces times the multiplier.

Detailed explanation-3: -When the taxes of any individual decrease, his consumption increases, and due to this the aggregate demand curve shifts right. But when the taxes of an individual increase, his consumption decrease as well as the aggregate demand curve shifts to left.

Detailed explanation-4: -Unsurprisingly the main factor is the level of disposable income. The more we have, the more we spend. So economic growth, leading to higher GDP and therefore household incomes is likely to result in higher consumption.