Macro Chapter 9 Flashcards

More consumption in either period is preferred

Consumers prefer a mix of consumption across periods rather than extreme amounts in one period (consumption smoothing)

Whether the timing of taxes affects consumer behaviour, given a fixed present value of government expenditure

that changes in the timing of taxes will not affect the equilibrium real interest rate or consumption of individuals.

1. Changes in taxes are the same for all consumers
2. Current taxes payers are alive to pay future taxes
3. Taxes are lump-sum
4. Credit markets are perfect (Consumers can borrow or lend as much as they want)