A tax rate cut acts like a higher marginal propensity to consume. Is it True or False? Why?

true - probably


if you cut taxes given your income does not change you will consume a larger part of your income, as long as you don't save 100% of the tax cut.


For example


I make $100 and consume $75, pay $15 in taxes, and save $10. If the tax rate is eliminated and spend $5 of my tax rebate and save the rest then of my same $100 I am now consuming $80. That is exactly the same as increasing my MPCA tax rate cut acts like a higher marginal propensity to consume. Is it True or False? Why?
I would say true for some. If they have more money, they want to spend it.A tax rate cut acts like a higher marginal propensity to consume. Is it True or False? Why?
Chances are a tax cute will cause a higher MPC, which may cause an increase in the average propensity to consume. But it all depends on each individual consumer.
it depends on the people if they will let their money into circulation..
The marginal propensity to consume is equal to the change in consumption divided by the change in income (MPC = dC/dY).


Since a tax cut is an increase in disposable income (and shifts the income curve/line out), we know that income has increased. But has consumption? If you assume consumption doesn't change, MPC decreases, so you could answer that based on that assumption then the answer is false. But assumptions aside there isn't enough information to answer.


P.S., I haven't done economics for a while, so the above is probably wrong ;)