If people expected that a fiscal policy in the form of a tax cut was temporary, then this policy's effect on the economy will tend to be:

Question

Quizplus · Accepted Answer

if people expect a tax cut to be temporary, they will likely not change their behavior enough to fully benefit from the tax cut, which means that the policy's effect on the economy will be weaker. This is because the temporary tax cut does not change consumers' expectations about their long-term income, so they are unlikely to change their consumption or investment plans in response.

If People Expected That a Fiscal Policy in the Form