What Prediction About Growth Would Most Economists Make If a Government

question 35

Multiple Choice

What prediction about growth would most economists make if a government enacts a tax on all transactions in financial markets?

• A)The tax would increase growth because it would encourage people to leave the unproductive financial sector and move to a useful sector of the economy.
• B)The tax would probably have no effect on growth because it would not affect capital or technology.
• C)The tax would reduce growth because it would make it harder for those with productive opportunities to obtain funds from savers.
• D)The effects would depend on whether it was borne primarily by the rich or by the poor.

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