Private savings and thus investment could be increased by which of the following government policies, ceteris paribus?

Question

Quizplus · Accepted Answer

All of the options listed above would incentivize private savings and increase investment. Eliminating the corporate income tax would encourage businesses to reinvest profits and allocate more funds towards investments. Allowing corporations to use "replacement cost accounting" allows for more accurate valuations of assets and ensures that depreciation costs are not overinflated, thereby freeing up capital for investment. Exempting interest earnings from income taxation rewards individuals and businesses for saving money and encourages them to invest those funds. Therefore, D is the best choice.

Private Savings and Thus Investment Could Be Increased by Which