if consumers' disposable income increases due to a permanent tax cut - isn't it correct to say that consumption will definitely increase but the extent to which it does depends on the marginal propensity to consumer and save. Therefore the effect on private saving is ambiguous as T decreases but C increases.

if consumers' disposable income increases due to a permanent tax cut - isn't it correct to say that consumption will definitely increase but the extent to which it does depends on the marginal propensity to consumer and save. Therefore the effect on private saving is ambiguous as T decreases but C increases.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 6SQP

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