There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. An increase in income growth in Mexico relative to income growth in the United States will cause the

An economist in an economy struggling with a low level of national saving suggested that the best way to increase the national saving of the country is by increasing net taxes. Which of the following statements points out a drawback in his argument?

a. While an increase in net taxes will indeed increase public saving, it will also lead to a corresponding decrease in household saving, meaning the net effect on national saving will be zero. b. An increase in net taxes means the government will have more money on hand. By keeping the government spending constant, the country will now have extra funds that it can put into savings. c. An increase in net taxes means that consumers will have less money in their pockets and thus less money to put into savings. As a result, national saving will decrease. d. An increase in net taxes means the government will have more money on hand. As a result, there is very little chance that there will be any extra funds for national saving.

When income is $15,000, the amount of income taxes owed is $1,500; when income increases to $20,000, the amount owed increases to $3,000. The average income tax rate when a person earns $15,000 is

A) 75 percent. B) 10 percent. C) 13.3 percent. D) 20 percent.