Holding other factors constant, if the income tax is replaced with a consumption tax so that saving is not taxed, then the real interest rate will ________ and the equilibrium quantity of saving and investment will ________.
A. increase; increase
B. increase; not change
C. decrease; increase
D. increase; decrease
Answer: C
You might also like to view...
In the classical model, people hold money because
a. it is a way to save. b. it makes trade easier. c. it is the way to measure the value of goods and services. d. it is an asset.
Anya has decided to start her own hair-styling salon. To purchase the necessary equipment, Anya withdrew $10,000 from her savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Anya's annual opportunity cost of the financial capital that has been invested in the business?
a. $300 b. $400 c. $700 d. $1,650
A reserve requirement of 10 percent implies a potential money deposit expansion multiplier of
A) 5. B) 10. C) 20. D) 100.
In the CPI market basket, the category which has the largest weight is
A. transportation. B. medical care. C. food and beverages. D. housing.