Which of the following are both correct?
a. Data show no correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the income effect.
b. Data show no correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the substitution effect.
c. Data show a positive correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the income effect.
d. Data show a positive correlation between saving and measures of economic well-being. A reduction in tax rates may reduce saving because of the substitution effect.
c
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The substitution effect of a real wage increase is observed when
A) the higher wage causes workers to take more leisure and work more hours. B) the higher wage causes workers to take more leisure and work fewer hours. C) leisure's higher opportunity cost causes workers to take less leisure and work more hours. D) leisure's higher opportunity cost causes workers to take more leisure and work fewer hours.
If a firm's marginal costs ________ then its ________
A) fall; best-response curve shifts B) rise; forced out of the oligopoly C) rise; output increases D) fall; price falls
Recession come at
a. regular intervals. During recessions consumption spending falls relatively more than investment spending. b. regular intervals. During recessions investment spending falls relatively more than consumption spending. c. irregular intervals. During recessions consumption spending falls relatively more than investment spending. d. irregular intervals. During recessions investment spending falls relatively more than consumption spending.
Liquidity refers to
A. the net worth of the individual in question. B. the amount of indebtedness held against an asset. C. the expected return from an asset. D. the ease with which an asset can be acquired or disposed of without incurring high transaction costs.