A consumption tax that replaces an income taxa. only taxes a household on the money it spends.b. ultimately taxes income twice-once when the household pays income tax and once when the householdmakes a purchase.c. discourages saving.d. would likely result in a lower level of saving than an income tax.

The characteristics of a consumption tax that replaces an income tax. Let's analyze the options: a.…

Answered: A consumption tax that replaces an…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government

Section: Chapter Questions

Problem 1WNG

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Eliminating double-taxation would likely a. raise saving and primarily benefit people with lower incomes. b. reduce saving and primarily benefit people with higher income. c. raise saving but primarily benefit people with higher incomes. d. reduce saving but primarily benefit people with lower incomes.
A consumption tax that replaces an income tax a) only taxes a household on the money it spends. b) discourages saving. c) would likely result in a lower level of saving than an income tax. d) ultimately taxes income twice—once when the household pays income tax and once when the household makes a purchase
Economics
Suppose an individual decreases their consumption in a year, resulting in more saving for and consumption in the next year. In a taxation system that taxes consumption but not interest income, what will happen to this individual's present value ilfetime tax burden? Ot will Increase. It will decrease. OIt will stay the same.
Consider an economy where the marginal propensity to save is 0.15; the marginal propensity to import is 0.05 and the marginal propensity to tax is 0.2. If there is an increase in government spending of $150 million, by how much would national income increase? (a) National income would increase by $350 million (b) National income would increase by $375 million (c) National income would increase by $210 million (d) National income would increase by $240 million
Increase in tax by the government: a. None of these b. Decreases the consumption by individuals c. Increases the saving by individuals d. Increases the consumption by individuals
When governments run budget surpluses, what is done with the extra funds?
What is the effect of a rise in the income tax on interest income? A rise in the income tax on interest income ______. A. increases the before-tax interest rate paid by borrowers and decreases borrowing and investment B. increases the after-tax interest rate received by lenders and increases saving C. decreases the before-tax interest rate paid by borrowers and increases borrowing and investment D. decreases the after-tax interest rate received by lenders and increases lendin
Explain the importance of government budget in an economy??
Which of the following is incorrect regarding tax revenues? a.they increase during recessions b.they increase during economic expansions c. they are a revenue source in the government's budget d. they change with changes in the tax rate
The government runs a budget surplus when ? A.tax revenue falls below its spending. B.the budget is balanced. C.tax revenue exceeds its spending. D. investment exceeds its spending.
Question 49 a. Identify three government policies that discourage saving. b. Why do many economists advocate a consumption tax rather than an income tax? c. Explain howa higher rate of return on saving could, at least in theory, lead to lower saving.

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