evaluate-the-impact-of-a-government-policy-that-reduces-taxes-on-capital-gains-h

Question

Evaluate the impact of a government policy that reduces taxes on capital gains. How might this affect consumption and saving?

Accepted Answer

It is likely to increase consumption as individuals have more disposable income.

Answer

It will only affect saving, not consumption.

Answer

It is likely to decrease consumption as individuals save more.

Answer

It will have no effect on consumption or saving.