The Substitution Effect

question 80

Multiple Choice

The substitution effect:

• A)predicts that taxpayers will work harder to pay for consumer products when tax rates increase.
• B)is one of the effects considered in static forecasting.
• C)results in the government collecting more aggregate tax revenue than under the income effect.
• D)is typically more descriptive for taxpayers with lower disposable income.
• E)None of the choices are correct.

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Definitions:

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