The most extreme example of a temporary tax cut was the one announced in 1992 by President Bush.The effect of that tax cut on consumer spending and aggregate demand was
A)zero.
B)likely smaller than if the cut had been permanent.
C)likely about the same as if the cut had been permanent.
D)likely larger than if the cut had been permanent.

Question

Quizplus · Accepted Answer

Temporary tax cuts are generally less effective in boosting consumer spending and aggregate demand compared to permanent cuts because consumers may save rather than spend the extra income, anticipating future tax increases.

The Most Extreme Example of a Temporary Tax Cut Was