Aggregate Response to Two Significant, but Temporary, Tax Adjustments Made

Multiple Choice

Aggregate response to two significant, but temporary, tax adjustments made in the United States during the late 1960s and early 1970s suggests a marginal propensity to consume for temporary changes in income

A) larger than the "Keynesian" long-run estimate of 0.94.
B) so far below the "Keynesian" long-run estimate of 0.94 that the forward- looking theoretical prediction of 0.05 to 0.1 is validated.
C) below the "Keynesian" estimate of 0.94 but above the theoretical predictions of 0.05 to 0.1.
D) that validates the applicability of the "Keynesian" long-run estimate of 0.94 for analyses of short-run phenomena.
E) identical to the forward-looking theoretical prediction of 0.16.