Given a Reduction in Income Tax Withheld, but No Change

question 29

Multiple Choice

Given a reduction in income tax withheld, but no change in income tax owed, households that act according to Ricardian equivalence would ______ the extra take-home pay, while those facing binding borrowing constraints would ______ the extra-take home pay.

• A) spend; spend
• B) spend; save
• C) save; save
• D) save; spend

---

Definitions:

Organizational Stakeholders

Individuals or groups that have an interest or stake in the success and outcomes of an organization, including employees, customers, suppliers, and investors.

Open Systems Anchor

A belief in organizational theory that emphasizes understanding organizations as open systems that interact with their environments, adaptable and influenced by external factors.

Values

Core beliefs or principles that guide an individual's actions and judgments and influence their behavior and attitudes.

Work Context

The conditions, environment, and factors that impact the nature of work, including physical, social, and organizational aspects.