In 1991 the federal government changed the withholding amounts for personal taxes. The change meant that people wouldn't have as much withheld from their paychecks. But there was no change in the tax code itself, so the amount of tax due in April 1992 was not changed. How would consumption and saving respond to this withholding change? (Note: you may assume a real interest rate of 0%.)

What will be an ideal response?

This is just a Ricardian equivalence example. People would not change their consumption, but would increase saving by the amount of the withholding change, so that they would have the same consumption pattern over time.