Which of the Following Two Effects of a Decrease in the Tax

question 17

Multiple Choice

Which of the following two effects of a decrease in the tax rate on saving would raise savings?

• A)the income effect and the substitution effect
• B)the income effect but not the substitution effect
• C)the substitution effect but not the income effect
• D)neither the substitution effect nor the income effect

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Definitions:

Ending Inventory

The total value of all unsold goods held by a company at the end of an accounting period.

Month End Inventory

Describes the total value of all inventory held by a business at the end of a month, used for accounting and reporting purposes.

Pairs Of Skis

Two skiing boards used for the sport of skiing, sold or used together as a set.

Goodyear

A multinational company known for its tire and rubber products.