Assuming that charitable giving is a normal good, the income effect of a decrease in personal tax rates would lead to
A. more giving because households would have more disposable income.
B. more giving because giving to charity would become less expensive relative to other goods.
C. less giving because giving to charity would become more expensive relative to other goods.
D. less giving because households would spend that money on luxury goods.
Answer: A
You might also like to view...
Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?
A) increase the variety of products that it can produce with a decrease in resources B) consume a combination of goods that lies outside its own production possibilities frontier C) produce a combination of goods that lies outside its own production possibilities frontier D) never have to engage in trade with other nations
The only firms that do not have market power are
A) firms in perfectly competitive markets. B) firms in industries with low barriers to entry. C) firms that do not advertise their products. D) firms that sell identical products.