A reduction in the tax rate on income from saving would do which of the following?
A) It would most directly benefit the poor in the short run.
B) It would increase labour productivity over time.
C) It would decrease the capital stock over time.
D) It would decrease real wages over time.

Question

Quizplus · Accepted Answer

A reduction in tax rate on income from saving would increase the return on savings and encourage individuals to save more, leading to an increase in the capital stock over time. This, in turn, would increase the productivity of labor and the overall economic growth of the country. The other options are not directly related to this scenario or are incorrect.

A Reduction in the Tax Rate on Income from Saving