Which of the Following Might Explain a Decrease in National

question 42

Multiple Choice

Which of the following might explain a decrease in national saving when the tax rate on savings is reduced?

• A)its substitution effect on saving and its effect on the government budget
• B)its substitution effect on saving but not its effect on the government budget
• C)its effect on the government budget but not its substitution effect on saving
• D)neither its substitution effect on saving nor its effect on the government budget

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Definitions:

Domestic Farm Lobby

The domestic farm lobby is an advocacy group focusing on promoting the interests of farmers and agricultural producers within a country, often influencing government policies.

Government Taxes

Compulsory financial charges imposed by governments on individuals, corporations, and transactions to fund public expenses.

Imported

Goods or services brought into one country from another for sale, trade, or use.

U.S. Customs Service

A federal agency responsible for regulating and facilitating international trade, collecting import duties, and enforcing U.S. trade laws and regulations.