If policy makers announce tax cuts, it is reasonable to expect that hand-to-mouth consumers will:
A)increase spending.
B)increase saving.
C)not pay taxes.
D)have less disposable income.

Question

Quizplus · Accepted Answer

When policy makers announce tax cuts, consumers will have more disposable income in their hands. Hand-to-mouth consumers will likely spend most of this extra income rather than save it. Therefore, it is reasonable to expect that they will increase their spending.

If Policy Makers Announce Tax Cuts, It Is Reasonable to Expect