The Bush tax cut passed in 2001 reduces the top income tax bracket from 39 percent to 35 percent over the next ten years.As a result of this tax cut,the demand for municipal bonds should shift to the ________ and the interest rate on municipal bonds should ________.
A) right; decline
B) right; increase
C) left; decline
D) left; increase

Question

Quizplus · Accepted Answer

The tax cut reduces the tax advantage of municipal bonds, which are tax-exempt, leading to decreased demand and higher interest rates.

The Bush Tax Cut Passed in 2001 Reduces the Top