Free Practice Question
CR · Critical Reasoning
605-655
Conclusion
Financial analysts suggest that for our nation to sustain its economic expansion, a greater level of individual savings is essential. A new legislative initiative proposes that citizens can create savings accounts where the interest accrued would not be taxed until the funds are withdrawn. Proponents of this initiative argue that it would enhance the funds available for banks to lend, with minimal impact on government tax income. However, historical data from similar tax-incentive schemes indicate that nearly all funds invested were merely shifted from existing personal savings, resulting in no net increase in overall personal savings. Based on the passage, which of the following conclusions is most strongly supported?
Answer Choices
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The proposed tax incentive is unlikely to attract enough additional money into personal savings accounts to make up for the attendant loss in tax revenues.
B
The government has no effective means of influencing the amount of money that people are willing to put into savings accounts.
C
A tax-incentive program that resulted in substantial loss of tax revenues would be likely to generate a large increase in personal savings.
D
Backers of the tax-incentive proposal undoubtedly have some motive other than their expressed aim of increasing the amount of money available for banks to loan.
E
The economy will be in danger unless some alternative to increased personal savings can be found to stimulate growth.
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A
AbhilashaJan 13, 2025
thank you for sharing
Details
Difficulty
605-655
Type
CR