If a Reduction in Taxes on Savings Reduced the Amount

question 36

Multiple Choice

If a reduction in taxes on savings reduced the amount of private saving,then the

• A)income effect equaled the substitution effect.
• B)income effect outweighed the substitution effect.
• C)the substitution effect outweighed the income effect.
• D)None of the above.

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Definitions:

Trade-In Allowance

The value credited to a customer when they exchange an older item towards the purchase of a new item, often used in automotive and electronics sales.

Intangible Assets

Non-physical assets having a value with an indefinite life span, such as patents, trademarks, and goodwill.

Amortized

Amortized refers to the gradual reduction of a debt over a period of time through regular payments that cover both the loan interest and the principal amount.

Natural Resources

Materials or substances occurring in nature which can be exploited for economic gain, such as minerals, forests, and water.