During the 2007-2009 financial crisis, many households found themselves with debts to repay. How might this explain the consumer response to the 2008 Tax Rebate?
What will be an ideal response?
The temporary tax rebate did not add much to permanent income, so it's no surprise that most of the money was not added to current spending. However, the immediate reduction in household debt increases lifetime resources. Generally, the cost of debt service is higher than the expected return on saving, so permanent income rose further and gave some boost to current consumption.
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A ________ yield curve predicts a future increase in inflation
A) steeply upward sloping B) slight upward sloping C) flat D) downward sloping
All of the following are variables that can be manipulated to affect fiscal policy except one. Which is the exception?
a. Personal income taxes b. Government expenditures on goods and services c. Government expenditures on unemployment benefits d. The federal funds rate e. Corporate income taxes