Answer to Question #204714 in Microeconomics for Ondisa

Question

Discuss the economic effects of personal income tax?

Answer 1

A tax decrease may boost economic growth by encouraging people to work more, save more, and invest more, a phenomenon known as the "substitution effect" by economists. A tax decrease, on the other hand, boosts an individual's income, allowing them to maintain their lifestyle by working less, saving less, and investing less.