Sunday, March 8, 2015

An increase in income tax rates will shift the savings schedule downwards? Is it true?

If there is an increase in income tax rates, people will save less money at every given level of income.  This is because they will have to give up more of that money in taxes and will not be able to save it.


However, if you are using "saving schedule" in the same way I would, this will not cause a change in that schedule.  If the x-axis of your graph is disposable income, then the schedule should not change.


All that an increase in income tax will do is to lower the amount of disposable income.  It will not affect the marginal propensity to save.  So all that will happen is a move along the line, not a shift of the line.

1 comment:

  1. Hello I am so delighted I located your blog, I really located you by mistake, while I was watching on google for something else, Anyways I am here now and could just like to say thank for a tremendous post and a all round entertaining website. Please do keep up the great work. https://evano.com

    ReplyDelete

Discuss at least two characteristics of Romanticism in John Keat's poem "Ode toa Nightingale".

The poet in Ode To A Nightingale  is an escapist .He escapes through imagination .On his way the bower of the bliss wher the nightingale is ...