In 1968, the Johnson administration passed a temporary surcharge on the personal income tax. Which of the following most closely describes the public's response?
A) Consumers significantly increased consumption by drawing down their savings.
B) Consumers significantly decreased consumption and began saving even more.
C) Consumers only minimally increased consumption while saving less.
D) Consumers decreased savings while maintaining the similar consumption levels.
E) Consumers significantly decreased both savings and consumption.

Question

Quizplus · Accepted Answer

The public's response was to decrease savings while maintaining similar consumption levels, as the temporary nature of the surcharge led people to adjust their savings rather than their consumption.

In 1968, the Johnson Administration Passed a Temporary Surcharge on the Personal