Which of the Following Statements About the Substitution Effect of an Income

question 48

Multiple Choice

Which of the following statements about the substitution effect of an income tax rate increase is false?

• A)The substitution effect is theoretically stronger for high-income taxpayers than for low-income taxpayers.
• B)The substitution effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner.
• C)The substitution effect is theoretically stronger for self-employed individuals who control their own time than for employees whose work schedules are controlled by their employers.
• D)None of the above is false.

---

Definitions:

Repression

A psychological defense mechanism where unwanted or uncomfortable thoughts, feelings, or desires are pushed out of conscious awareness.

Unconscious Mind

A part of the mind that is inaccessible to the conscious mind but that affects behavior and emotions.

Unacceptable Ideas

Concepts, thoughts, or plans considered inappropriate or offensive within a given context or community.

Regression

A defense mechanism of retreating to the thoughts and actions of an earlier, “safer” age.