If tax reduction and simplification are effective, then:
A)labour supply decreases.
B)saving increases.
C)investment decreases.
D)fewer new firms are formed.

Question

Quizplus · Accepted Answer

Tax reduction and simplification can increase the disposable income of individuals, which may lead to an increase in savings. However, it is not expected to affect labour supply, investment and formation of new firms significantly. Therefore, the correct choice is B - saving increases.

If Tax Reduction and Simplification Are Effective, Then