Suppose that the government increases its tax rate on interest earned. Afterward, savings increase. Which effect dominates,

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Suppose that the government increases its tax rate on interest earned. Afterward, savings increase. Which effect dominates, the income effect or the substitution effect? Explain.

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Public Finance and Public Policy

ISBN: 978-1429278454

4th edition

Authors: Jonathan Gruber

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Question Posted: Apr 25, 2015 07:45 AM

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Suppose that the government increases its tax rate on interest earned. Afterward, savings increase. Which effect dominates,

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An increase in the tax on interest earned makes individuals poorer so the ...View the full answer

Public Finance and Public Policy

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