Why Do Permanent Tax Cuts Have a Greater Impact on Consumption

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.