Multiple Choice
A decrease in the tax rate is more likely to increase national saving if
A) the income effect of a change in the interest rate is small and an increase in private saving tends to have a small impact on the capital stock.
B) the income effect of a change in the interest rate is small and an increase in private saving tends to have a large impact on the capital stock.
C) the income effect of a change in the interest rate is large and an increase in private saving tends to have a small impact on the capital stock.
D) the income effect of a change in the interest rate is large and an increase in private saving tends to have a large impact on the capital stock.
Correct Answer:

Verified
Correct Answer:
Verified
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