Suppose in Some Country That the First $5,000 of Interest

question 27

Multiple Choice

Suppose in some country that the first $5,000 of interest income is exempt from income tax.If the government then removed this exemption

• A)the interest rate and investment would rise.
• B)the interest rate would rise and investment would fall.
• C)the interest rate would fall and investment would rise.
• D)the interest rate and investment would fall.