A Reduction in the Tax Rate on Income from Saving

question 19

Multiple Choice

A reduction in the tax rate on income from saving would

• A)most directly benefit the poor in the short run.
• B)increase real wages over time.
• C)decrease the capital stock over time.
• D)decrease productivity over time.

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Definitions:

Manipulated

Refers to the controlled alteration or handling of variables in experiments to determine cause-and-effect relationships.

Placebo Effect

The phenomenon that occurs in an experiment when a participant’s response to a treatment is due to his or her expectations about the treatment rather than to the treatment itself.

Sugar Pill

A placebo, often used in medical trials to test the efficacy of new drugs by comparing their effects to those of an inert pill.

Drowsy

A feeling of being sleepily tired and lethargic, not fully awake, often as a prelude to falling asleep.