A decrease in taxes on the current generation would have no effect on consumption or national saving if

Question

Quizplus · Accepted Answer

If consumers bequeath all of the tax cut to the next generation, there will be no change in consumption or national saving in the current generation. The individuals may not increase their current consumption or save more, but they may choose to pass on the tax cut to their heirs, resulting in the next generation having more consumption or saving. Therefore, the current generation's actions do not affect the economy, making it the correct answer.

A Decrease in Taxes on the Current Generation Would Have