a-government-implements-a-tax-cut-but-the-public-believes-it-will-be-reversed-so

Question

A government implements a tax cut, but the public believes it will be reversed soon. How might this perception affect consumer behavior?

Accepted Answer

Consumers may save the extra income instead of spending it.

Answer

The perception will have no effect on consumer behavior.

Answer

Consumers will increase their spending significantly.

Answer

Consumers will invest the extra income in long-term assets.