Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts?
a. Permanent tax cuts have a greater effect on expected long-run inflation.
b. Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective.
c. Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function.
d. Permanent tax cuts affect expectations of long-run income more than temporary tax cuts.
d
You might also like to view...
Which of the following statements is true?
(a) Poland, Denmark and Sweden currently do not use the Euro. (b) England, Poland and Portugal currently do not use the Euro. (c) England, Sweden and Malta currently do not use the Euro. (d) England, Greece and Cyprus currently do not use the Euro.
When the private costs and the social costs are NOT the same, there is a(n)
A. externality. B. monopoly. C. public good. D. internality.