Question: As mentioned in the chapter, in 1968, the U.S. government placed a temporary 10% surcharge on personal and corporate income in an attempt to prevent

As mentioned in the chapter, in 1968, the U.S. government placed a temporary 10% surcharge on personal and corporate income in an attempt to prevent the economy from overheating and causing inflation to accelerate.
a. How would you describe this policy?
b. Economic research has shown that consumers are more likely to make changes in consumption spending when there is a permanent change in their income. Based on this idea, would you expect this surcharge to have the desired result?
c. How would your answer be different if the surcharge were permanent?

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a This is a discretionary fiscal policy It is also a contractionary fiscal policy b ... View full answer

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