Which of the Following Would Not Be a Result of Replacing

question 157

Multiple Choice

Which of the following would not be a result of replacing the income tax with a consumption tax so that interest income was no longer taxed?

• A)The interest rate would decrease.
• B)Investment would decrease.
• C)The standard of living would eventually rise.
• D)The supply of loanable funds would shift right.

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Definitions:

Kinked Demand Curve

A concept in economics describing a situation where a firm's demand curve has a distinct kink due to competitors only matching price increases but not price decreases, leading to price rigidity.

Marginal Cost

The extra expense associated with the production of an additional unit of a product or service.

Kinked Demand Curve Model

A model in economics illustrating how firms in oligopoly markets might maintain stable prices despite changes in cost or demand, due to the asymmetric responses of rivals to price changes.

Price Reduction

A decrease in the selling price of goods or services, often to attract more buyers or respond to market conditions.