1. (Williamson Ch9 Q3) Consider the following effects of an in- crease in taxes for a consumer. (a) The consumer's taxes increase by At in
1. (Williamson Ch9 Q3) Consider the following effects of an in- crease in taxes for a consumer. (a) The consumer's taxes increase by At in the current period. How does this affect current consumption, future consump- tion, and current saving? (b) The consumer's taxes increase permanently, increasing by At in the current and future periods. Using a diagram, de- termine how this affects current consumption, future con- sumption, and current saving. Explain the differences be- tween your results here and in part (a)
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