b. What is the term that describes this type of reaction to a tax rate increase?O Substitution effectO Price effectO Endowment effectO Budget constraintO Income effect

The response to an increase in tax rates is appropriately referred to as the "income effect." The…

Answered: b. What is the term that describes this…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter17: Dynamic Capital Structures And Corporate Valuation

Section: Chapter Questions

Problem 1Q

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b. What is the term that describes this type of reaction to a tax rate increase? O Substitution effect O Price effect O Endowment effect O Budget constraint O Income effect