Suppose an Individual Retirement Account (IRA)has a Contribution Limit of $3,000

Suppose an Individual Retirement Account (IRA) has a contribution limit of $3,000 per year and that prior to the passage of the law establishing IRAs,Hamilton was not saving any of his income.After IRAs became available,Hamilton saved $2,000 per year.Which statement is TRUE?

A) The tax subsidy in the IRA had a marginal effect on Hamilton's saving.
B) The tax subsidy in the IRA had an inframarginal effect on Hamilton's saving.
C) The income effect exceeded the substitution effect.
D) The income and substitution effects cancelled each other out.