Norway has a lower tax on dividend and interest income than does United Kingdom. We would expect Norway to have a ________ tax wedge and a ________ growth rate of real GDP.

Question

Quizplus · Accepted Answer

A lower tax on dividend and interest income in Norway compared to the United Kingdom suggests that investments in Norway are taxed less heavily. This would likely result in a smaller tax wedge, as the difference between before-tax and after-tax returns on investments is reduced. Consequently, this environment encourages investment and savings, potentially leading to a faster growth rate of real GDP due to increased capital formation and productivity.

Norway Has a Lower Tax on Dividend and Interest Income