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.
b
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Most of the debates in the U.S. Congress center on
A) efficiency concerns. B) equity concerns. C) both efficiency and equity equally. D) market inefficiency.
One reason why the spending side of the budget is more susceptible to special interests than the tax side is because _____
a. spending can be allocated geographically, but taxation cannot b. tax programs are largely determined by the Internal Revenue Service, not Congress c. people do not care about taxation d. the administrative costs of spending programs are lower, making change cheaper
The sticky-price theory of the short-run aggregate supply curve says that when the price level is higher than expected, some firms will have
a. higher than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. b. higher than desired prices, which leads to a decrease in the aggregate quantity of goods and service supplied. c. lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied. d. lower than desired prices, which leads to a decrease in the aggregate quantity of goods and services supplied
When the government finances a shovel-ready project through taxes or borrowing, this will result in
What will be an ideal response?