\"An increase in government transfers to households (eg. Unemployment insurance

Question

"An increase in government transfers to households (eg. Unemployment insurance payments) not accompanied by an increase in taxes will cause the economy's level of saving to increase." Indicate whether this statement is true or false and explain why. "An increase in government transfers to households (eg. Unemployment insurance payments) not accompanied by an increase in taxes will cause the economy's level of saving to increase." Indicate whether this statement is true or false and explain why. "An increase in government transfers to households (eg. Unemployment insurance payments) not accompanied by an increase in taxes will cause the economy's level of saving to increase." Indicate whether this statement is true or false and explain why.

Explanation / Answer

False

The statement "An increase in government transfers to households (eg. Unemployment insurance payments) not accompanied by an increase in taxes will cause the economy's level of saving to increase." is false as with the increase of transfers the income of the households increases but along with that due to increase in the Taxes the gains recieved from transfers are crowded out as the Net disposible income of the household doesn't raise due to the tax increase , so savings will also n't rise.

If you don't understand anything, then comment, I will revert back on the same.

And If you liked the answer then please do review the same. Thanks :)

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.