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Posted by on Monday, December 20, 2010 at 11:20pm.

According to the permanent hypothesis, households will tend to react to a temporary tax cut by:

A. assuming the new tax level will be permanent.
B. saving most of the additional disposable income.
C. increasing consumption sharply in response to the higher disposable income.
D. temporarily increasing their magical propensity to consume

I'm stuck between B and D. any helpp?

  • economics PLEASE HELP - , Tuesday, December 21, 2010 at 10:54am

    Check this article.

    (Broken Link Removed)

  • economics PLEASE HELP - , Thursday, October 3, 2013 at 8:30am

    According to the permanent income hypothesis, households will tend to react to a temporary tax cut by

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