Why Should the Tax Laws to Encourage Saving Be Reformed

question 58

Multiple Choice

Why should the tax laws to encourage saving be reformed?

• A)because saving is a key determinant of long-run prosperity
• B)to increase taxes on capital gain
• C)because higher-income households are taxed too much
• D)because economic theory clearly predicts that higher rate of return encourages saving

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Definitions:

Cognitive Dissonance

The psychological unease felt by someone who simultaneously maintains two or more conflicting beliefs, ideas, or values.

Theory of Reasoned Action

A psychological theory that predicts an individual's intention to engage in a behavior at a specific time and place, considering attitudes toward the behavior and subjective norms.

Behavioral Control

involves the regulation of one's behavior, including the ability to start, maintain, or cease actions in accordance with one's goals and societal norms.

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.