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[FRIENDLYBOY]

One of the unknown factors with tax cuts is what consumers will do with the extra income thereby made available to them. Such cuts are usually made with the aim of stimulating a flagging economy, but the effects on growth tend to be negligible if consumers, instead 5 of going on a spending spree buying durable goods such as home appliances, decide either to pay off their accumulated debts or hold on to the extra cash in the form of savings. And the fact is that usually when a tax cut is implemented, company investment tends to be running at a low ebb, and only the consumer has the wherewithal to provide 10 a fresh impetus.

1. According to the passage, tax cuts automatically provide more money for
(A) consumers.
(B) companies.
(C) banks and creditors.
(D) home-appliance manufactures.
2. According to the passage, the effects of a tax cut are
(A) stimulating
(B) negligible
(C) unpredictable
(D) expensive
3. It may be inferred from the passage that a government which reduces taxes usually wants consumers to
(A) buy things like cars and refrigerators
(B) save their extra money
(C) pay off their debts
(D) invest their extra cash in things like gold
4. According to the passage, under what circumstances are tax cuts generally introduced?
(A) when consumers are on a spending spree
(B) when company investment is providing a fresh impetus
(C) when the economy needs a boost
(D) When negligible growth is sought
5. The passage implies that
(A) consumer spending may help the level of company investment
(B) When there is a tax cut, consumers do not know whether they will have extra income
(C) tax cuts are always resorted to if economic growth falls below a certain point.
(D) if consumers are neglected they go on shopping sprees.