The Incentive to Consume Tax-Deductible Goods, Instead of Nondeductible Goods

question 35

Multiple Choice

The incentive to consume tax-deductible goods, instead of nondeductible goods, increases when

• A) marginal tax rates are high.
• B) marginal tax rates are low.
• C) the inflation rate is low and relatively stable.
• D) This is a trick question: the consumption of tax-deductible goods is not affected by marginal tax rates.

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