Unformatted text preview: c. an income effect that discourages saving and a substitution effect that encourages saving. d. an income effect that encourages saving and a substitution effect that discourages saving. 38. A reduction in the tax rate on income from saving would a. most directly benefit the poor in the short run. b. increase real wages over time. c. decrease the capital stock over time. d. decrease productivity over time. 39. The five debates over macroeconomic policy exist mostly because a. economists disagree over basic issues such as the importance of saving for economic growth. b. there are tradeoffs and people disagree about the best way to deal with them. c. politicians offer misleading information. d. people fail to clearly see the benefits or the costs of most changes....
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- Spring '08
- Economics, budget deficit, substitution effects, c. impose penalties