Asked by Woedem Malorku on Jun 29, 2024
Verified
Which of the following reduce the incentive for households to save?
A) Both means-testing of government benefits and inheritance taxes
B) Means-testing of government benefits but not inheritance taxes
C) Inheritance taxes, but not means-testing of government benefits
D) Neither means-testing of government benefits nor inheritance taxes
Means-Testing
The procedure to determine eligibility for government assistance or services based on the applicant's financial means or income level.
Inheritance Taxes
Taxes imposed on the value of an estate or property transferred from a deceased person to their heirs.
Government Benefits
Financial assistance programs provided by the government to individuals or groups to support their income, health, education, or welfare.
- Understand the consequences of fiscal and monetary policies on the habits of saving, consuming, and investment.
Verified Answer
AA
Abdullah AladibJul 01, 2024
Final Answer :
A
Explanation :
Means-testing of government benefits can reduce the incentive to save because individuals might limit their savings to qualify for benefits. Inheritance taxes can also discourage saving by reducing the amount that can be passed on to heirs. Both factors can influence households to save less.
Learning Objectives
- Understand the consequences of fiscal and monetary policies on the habits of saving, consuming, and investment.