Other things held constant, following an increase in the effective tax rate on capital, the real interest rate _____ and desired national savings _______ a. rises; declines b. rises; increases c. falls; declines d. falls; increases e. remains the same; remains the same
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An increase in the effective tax rate on capital means that the return on capital (investment) will decrease, as a larger portion of the returns will be taken away as taxes. Show more…
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