The pretax financial statement income for Yeager Industries was $32 million the year ended December 31, 2018. Yeager’s taxable income was $25 million. The difference was due to differences between depreciation for financial reporting purposes and tax purposes. The enacted tax rate is 40% for 2018 and 35% thereafter. If no 2018 taxes have been paid, what is Yeager‘s current liability for income taxes for 2018

What could explain why a decrease in taxes could lead to a less-than-proportionate increase in output? a. as a result of diminishing returns to current consumption, consumers may choose to spread the extra spending over the long term rather than consuming the proceeds of a tax cut all at once. b. consumers may choose to save much of the tax cut in anticipation of having to pay higher taxes in the future. c. a decrease in taxes will necessitate lower government outlays, thus largely offsetting the higher consumption expenditures of households. d. all of the above. e. a and b only.