In the figure above, if the interest rate is 4 percent, there is a $0.1 trillion excess

Consider the following methods of taxing a corporation's income:

a. A flat tax, as opposed to a progressive tax, is levied on corporate profits. b. A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits. The shareholder would then be required to include this amount as taxable income for her personal income tax. The corporation does not pay a tax. c. A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains. Which of the methods above would avoid double taxation? A) a, b, and c B) a and b only C) a and c only D) b and c only

The substitution effect is the concept that changes in consumption of a good result from changes in the relative price of a competing good

a. True b. False Indicate whether the statement is true or false