Why Do Permanent Tax Cuts Have a Greater Impact on Consumption

question 70

Multiple Choice

Why do permanent tax cuts have a greater impact on consumption than temporary tax cuts?

• A)Permanent tax cuts have a greater effect on expected long-run inflation.
• B)Permanent tax cuts are perceived as minor while temporary tax cuts are larger and more effective.
• C)Permanent tax cuts cause movement along the consumption function, while temporary tax cuts shift the consumption function.
• D)Permanent tax cuts affect expectations of long-run income more than temporary tax cuts.

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Definitions:

Raphe Nuclei

Clusters of neurons located in the brainstem, involved in the regulation of sleep, mood, and appetite, primarily through the release of serotonin.

Insomnia

A common sleep disorder characterized by difficulty falling asleep, staying asleep, or obtaining restorative sleep, affecting one's overall health and quality of life.

Biological Adaptation

The process through which organisms adjust to changes in their environment over time, often through genetic changes or behavior modification.

Restorative Process

Processes or activities that restore health, strength, or well-being, often in the context of recovering from physical or mental exertion.