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:

Stagflation

An economic condition characterized by high inflation, high unemployment, and stagnant demand in a country’s economy.

Aggregate Demand

The collective demand for all goods and services within a particular economy at a specific price level and time period.

Aggregate Demand

is the total demand for all goods and services within a particular market or economy at a given price level and in a given time period.

Economic Fluctuations

Variations in the level of economic activity in a country over time, characterized by periods of boom and recession.