Which of the Following Is Not an Argument Made by Those

question 354

Multiple Choice

Which of the following is not an argument made by those who oppose reforming the tax laws to encourage saving?

• A)A public budget surplus can raise national saving.
• B)The substitution effect of a higher return to saving may be about equal to the income effect of a higher return to saving.
• C)Low-income households save a larger fraction of their income than high-income households.
• D)Tax cuts might cause a budget deficit.

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Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money, or the rate earned on an investment.

Annual Benefits

Benefits or returns that are received on a yearly basis from investments, insurance policies, or employee benefit programs.

Compounded Monthly

Refers to the process of applying interest to an initial amount and any accumulated interest on a monthly basis.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.