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When Consumers Lend at a Lower Rate Than They Borrow

Question 13

Multiple Choice

When consumers lend at a lower rate than they borrow, a decrease in current taxes implies


A) current consumption increases by the amount of the tax cut.
B) current consumption remains unchanged.
C) both current and future consumption increase.
D) current savings increases by the amount of the tax cut.
E) current consumption decreases and future consumption increases.

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