Suppose a Country Has a Consumption Tax That Is Similar

question 79

Multiple Choice

Suppose a country has a consumption tax that is similar to a state sales tax.If its government were to eliminate the consumption tax and replace it with an income tax that includes an income tax on interest from savings,what would happen?

• A)There would be no change in the interest rate or saving.
• B)The interest rate would decrease and saving would increase.
• C)The interest rate would increase and saving would decrease.
• D)None of the above is correct.

---

Definitions:

Marketing Mix

The factors that a business can change in selling products to customers—product, place, price, and promotion.

Market Will Bear

Refers to the maximum price that consumers are willing to pay for a product or service in the market.

Perceived Value

The value that a customer believes a product or service has, which may not necessarily reflect its actual price or inherent value.

Tangible Costs

Explicit expenses or outlays that are easily quantifiable and often involve monetary transactions, such as equipment purchases, rent, and salaries.