If the goal of a government policy change is to increase the incentive for taxpayers to work and/or invest,which policy is MOST likely to be successful?
A) a temporary tax rebate
B) a permanent tax rebate
C) a decrease in marginal tax rates
D) an increase in interest rates

Question

Quizplus · Accepted Answer

A decrease in marginal tax rates would provide a long-term, sustained incentive for taxpayers to work and invest. Permanent tax rebates could also be successful, but may not have as strong of an impact as a sustained decrease in tax rates. Temporary tax rebates may provide a short-term boost, but are unlikely to have a lasting impact. Increasing interest rates may actually have a negative impact on investment, as borrowing becomes more expensive.

If the Goal of a Government Policy Change Is to Increase