Due to a tax increase, consumers decrease the amount of money they spend on vacations. Your answer: Consumer Spending Investment Spending Government Spending Exports Imports GDP Increase GDP Decrease

Consumer Spending

Explanation:

If due to a tax increase, consumers decrease the amount of money they spend on vacations, then the consumer spending is the macroeconomic variable that will be impacted because increase in taxes does not impact government spending since it is consumers that bear the tax burden.

Lower income tax rates increases the purchasing or spending power of consumers and by extension increases aggregate demand, leading to economic growth (and possibly inflation).

Contrariwise, a hike in tax rates will reduce the purchasing power of consumers by depleting disposable income and aggregate demand by extension.