Final answer:
The IS curve shifts to the left when B)taxes increase, as this causes a reduction in consumption and a leftward shift in the Aggregate Demand curve, which can combat inflation.
Step-by-step explanation:
The IS curve represents the relationship between interest rates and the level of income that brings the goods market into equilibrium. When autonomous consumption increases, it stimulates economic activity and shifts the IS curve to the right. However, a tax increase on consumer income will cause consumption to fall, leading to a leftward shift in the Aggregate Demand (AD) curve, which can also cause a leftward shift in the IS curve. A leftward shift in the AD curve is a common method used to fight inflation. On the other hand, if autonomous investment were to increase, this would typically lead to a rightward shift in the IS curve because higher investment increases overall demand. Therefore, the correct answer to the question is that the IS curve shifts to the left when taxes increase.