A Cut in Higher Rate Taxes Has Two Effects

question 15

Multiple Choice

A cut in higher rate taxes has two effects. Which statement is correct?

• A) The substitution and income effect work in the same direction.
• B) The substitution effect increases the opportunity cost of leisure.
• C) The income effect increases the opportunity cost of leisure.
• D) The substitution effect will decrease the opportunity cost of leisure

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Definitions:

Human Resources

A department within organizations responsible for overseeing the management of personnel, including hiring, training, and compliance issues.

Relevance

The degree to which something is related or useful to what is happening or being talked about.

Canadian Census

A national survey conducted by Statistics Canada that collects demographic information on its residents.

University Education

Higher education provided by universities, comprising undergraduate, postgraduate, and doctoral studies, aimed at granting degrees and fostering research and learning.