Which of the Following Would Be Most Likely to Encourage

question 119

Multiple Choice

Which of the following would be most likely to encourage households to save a greater proportion of their income?

• A) a reduction in the sales tax rate
• B) an increase in the capital gains tax rate
• C) an elimination of tariffs (taxes on imported goods)
• D) changing to a flat income tax (with a single tax rate charged on all income)
• E) changing from an income tax to a consumption tax

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Definitions:

Command Economic System

In this type of economic structure, a central government or authority is responsible for making decisions about how goods and services are produced and distributed.

Goods And Services

Physical products and intangible activities that fulfill the needs or wants of consumers, forming the basis of all economic activity.

Production Possibilities Curve

A graphical representation that shows the different combinations of two goods or services that can be produced within a given resource constraint.

Fully Employed

A situation in which all available labor resources are being used in the most economically efficient way.