If a Reduction in Taxes on Savings Reduced the Amount

question 36

Multiple Choice

If a reduction in taxes on savings reduced the amount of private saving,then the

• A)income effect equaled the substitution effect.
• B)income effect outweighed the substitution effect.
• C)the substitution effect outweighed the income effect.
• D)None of the above.

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Definitions:

True Values

The actual, inherent worth or validity of something, often contrasted with perceived or estimated values.

Selling Price

The amount of money a buyer pays to acquire a product or service from a seller.

Vickery Auction

An auction model wherein bidders submit sealed bids, the highest bidder wins but pays the price offered by the second-highest bid, promoting truthful bidding.

Optimal Strategy

The best possible plan of action to achieve a specific goal or to maximize efficiency or effectiveness in a given situation.