A permanent tax cut of 10% would cause an increase in consumption,output,and the price level and a decrease in unemployment equal to that caused by a temporary tax cut of 10%.

Question

Quizplus · Accepted Answer

A permanent tax cut is likely to have a larger impact on consumption and output compared to a temporary tax cut because it affects long-term income expectations, leading to more significant changes in behavior.

A Permanent Tax Cut of 10% Would Cause an Increase