Asked by Leonardo Garcia on Jun 28, 2024
Verified
Explain how tax provisions to encourage private saving may reduce national saving.
National Saving
The total amount of savings generated within a country, equal to the sum of private and public savings.
- Analyze the efficacy of distinct government policies in shaping saving and investment decisions.
Verified Answer
JM
joanna martinezJun 30, 2024
Final Answer :
Without careful planning it is possible that a reduction in taxation of capital income (for example) would reduce government revenue. If there is no offsetting reduction in government spending the result is a budget deficit. This is a decrease in public saving. If the increase in private saving resulting from the tax change is not greater than the decrease in public saving the result is a decline in national saving.
Learning Objectives
- Analyze the efficacy of distinct government policies in shaping saving and investment decisions.
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