Suppose that the government is considering two tax cuts, one temporary and one permanent. Each cut will give each taxpayer the same amount in the first year. The permanent-income hypothesis predicts that: A) each tax cut will lead to the same amount of consumption in the first year. B) the temporary tax cut will lead to more extra consumption in the first year. C) the permanent tax cut will lead to more extra consumption in the first year. D) the temporary tax cut will lead to no extra consumption at all in the first year.

Suppose that the government is considering two tax cuts, one temporary and one permanent. Each cut will give each taxpayer the same amount in the first year. The permanent-income hypothesis predicts that: A) each tax cut will lead to the same amount of consumption in the first year. B) the temporary tax cut will lead to more extra consumption in the first year. C) the permanent tax cut will lead to more extra consumption in the first year. D) the temporary tax cut will lead to no extra consumption at all in the first year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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