Which Statement Regarding Tax-Subsidized Saving for Retirement Is TRUE

question 6

Multiple Choice

Which statement regarding tax-subsidized saving for retirement is TRUE?

• A) Tax subsidies for saving unambiguously increase saving.
• B) The income effect of tax subsidies for saving induces individuals to save more.
• C) The substitution effect of tax subsidies for saving induces individuals to save less.
• D) The income effect of tax subsidies for saving induces individuals to save less.

---

Definitions:

Dividend Payout

The portion of the earnings a company decides to pay to its shareholders in the form of dividends.

Stock Prices

The current market price of a company's shares, representing the valuation that the market assigns to a single share of the company's stock.

Dividend Policy

A company’s strategy or guidelines set for allocating a portion of its earnings back to its shareholders in the form of dividends.

Automatic Reinvestment

A plan that allows investors to automatically reinvest dividends or capital gains back into the security that generated them.