Suppose that a person in the United States earns 5,000 and faces ...

[craiczarry]

Suppose that a person in the United States earns 5,000 and faces an income tax rate of 25 percent. If that person saves 2,000 and invests it at 12 percent then he or she will pay
 
  A) less in taxes because of the saving. B) tax only on the income spent.
  C) more in taxes than if there had been no saving. D) tax only on the amount saved.

Question 2

During an economic boom, output exceeds potential output.
 
  Indicate whether the statement is true or false

[owenfalvey]

Answer to Question 1

C

Answer to Question 2

TRUE