Suppose That the Government Is Considering Two Tax Cuts, One

question 95

Multiple Choice

Suppose that the government is considering two tax cuts, one temporary and one permanent. Each cut will give each taxpayer the same amount in the first year. The permanent-income hypothesis predicts that:

• A) each tax cut will lead to the same amount of consumption in the first year.
• B) the temporary tax cut will lead to more extra consumption in the first year.
• C) the permanent tax cut will lead to more extra consumption in the first year.
• D) the temporary tax cut will lead to no extra consumption at all in the first year.

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Definitions:

Ataxia

A neurological sign consisting of lack of voluntary coordination of muscle movements, which can include gait abnormality, speech changes, and abnormalities in eye movements.

Primary Somatosensory Cortex

The area of the brain responsible for processing somatic sensations, allowing for the perception of tactile stimuli.

Secondary Somatosensory Cortex

A region of the brain that processes sensory information from the body, contributing to the perception of touch, pressure, and pain.