How does an increase in income generally affect consumption?

An increase in income generally leads to an increase in consumption because as individuals or households earn more money, they typically have more resources available to spend on goods and services. This phenomenon is rooted in the basic principles of consumer behavior and economic theory, which suggest that as income rises, consumers feel more confident in their financial situation and are likely to increase their spending.

Additionally, the marginal propensity to consume, which refers to the proportion of additional income that is spent rather than saved, usually indicates that a portion of any income increase will be channeled into greater consumption of both essential and non-essential items. This means that as people's income grows, not only do they maintain their current consumption levels, but they also tend to spend more on better quality goods, luxury items, and services, thereby stimulating economic growth.

The other options do not reflect this standard economic relationship between income and consumption. For instance, consumption decreasing with an increase in income contradicts the fundamental idea that higher incomes enable increased spending. Similarly, the concept that consumption remains unchanged fails to account for behavioral responses to changes in income levels, and suggesting that consumption is only affected by taxes overlooks other critical factors like income growth and consumer confidence.