A permanent decrease in taxes leads to
A) a large increase in current consumption.
B) a small increase in current consumption.
C) a small decrease in current consumption.
D) a large decrease in future consumption.
E) no changes to consumption.

Question

Quizplus · Accepted Answer

A permanent decrease in taxes would increase disposable income, leading people to have more money available to spend on consumption in the short-term. This would cause a large increase in current consumption.

A Permanent Decrease in Taxes Leads to