Which of the Following Circumstances Is Likely to Exaggerate the Expected

Multiple Choice

Which of the following circumstances is likely to exaggerate the expected shift in an IS curve in response to a reduction in taxes?

A) A perception that the tax change is temporary
B) A perception that the tax change is permanent
C) A prior anticipation of higher taxes throughout the foreseeable future
D) A prior anticipation that taxes would not change in the foreseeable future
E) The certain knowledge that nothing is certain but death and taxes