If Consumers Expect a Tax Cut to Be Temporary

Multiple Choice

If consumers expect a tax cut to be temporary

A) the increase in consumption will be much larger than for a permanent tax cut.
B) the increase in consumption will be much smaller than for a permanent tax cut.
C) the decrease in consumption will be much smaller than for a permanent tax cut.
D) consumption remains unchanged.
E) the overall effects are much larger than for a permanent tax cut.