Question

In the neoclassical model with fixed income, if there is a decrease in net taxes with...

In the neoclassical model with fixed income, if there is a decrease in net taxes with no change in government spending, then public saving ______ and private saving ______

Select one:

a. increases; increases

b. increases; decreases

c. decreases; increases

d. decreases; does not change

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Answer #1

Ans. Neo classical economics is a theory that focuses on the perception of the usefulness of the products influences supply and demand.

According to Neo Classical economics, the rational behaviour and goals of the sellers and consumers in the market drive the flow of resources, goods , services and money.

Followers of neo classical economics believe strongly that market must be free. This means that state should refrain from creating too many rules and regulations.

Ans. Public savings will decrease and Private savings does not change.

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