<p>You are looking at the short term, this year's GDP. It is possible that investment results in a higher GDP later on, in subsequent years.</p>
<p>Since both investment and savings are taxed, people are not disincentivized from investing. However, if you people consume instead of investing then while this years GDP is unchanged, the GDP in subsequent years might be lower.</p>
<hr />
<p>The question is a poor one though.</p>
<p>I would also have thought that they meant (B), because unless you notice that savings are also taxed, this seems like a textbook free markets question.</p>
<p>Also, the phenomena are not very detailed, thus assigning any likelihood is difficult.</p>

CC BY-SA 4.0
2022-04-16T12:13:56.997Z
Hi @Giskard, Thank you for the answer. Option (C) also seems confusing. (For High School Macroeconomics), Won't discouraging immigration lead to slower economic growth?
MangoPizza
CC BY-SA 4.0
2022-04-16T13:01:23.093Z
Indeed. As I wrote, without details assigning any likelihood is difficult.
Giskard
CC BY-SA 4.0
2022-04-16T07:49:46.840Z
2022-04-16T07:58:21.690Z
2022-04-16T07:58:21.690Z
Giskard
<p><a href="https://i.sstatic.net/dZCz6.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/dZCz6.png" alt="Image" /></a></p>
<p>Text in image:</p>
<p>Which of the following is LEAST likely to be associated with a higher rate of economic growth?</p>
<p>(A) strong protection of property rights</p>
<p>(B) taxes on savings and investment</p>
<p>(C) policies that discourage immigration</p>
<p>(D) higher consumption</p>
<p>(E) encouraging the replenishment of natural resources</p>
<p>According to me, the answer should be (B). Taxes on investment will lead to lower economic growth, since <span class="math-container">$$\operatorname{rGDP} = C + I + G + XN$$</span> and more <span class="math-container">$I$</span>, more economic growth.</p>
<p>Economic growth (for the purpose for High School Macroeconomics) means a right shift in PPC, so less investment, less innovation etc.</p>
<p>Can someone explain? Thanks</p>

CC BY-SA 4.0
2022-04-16T17:52:24.327Z
This question is similar to a recent question.
erik
<macroeconomics><economic-growth>
Does higher tax encourage high economic gowth?
MangoPizza
# Does higher tax encourage high economic gowth?

(Asked by: username_0 on 2022-04-16)

[![Image](https://i.sstatic.net/dZCz6.png)](https://i.sstatic.net/dZCz6.png)

Text in image:

Which of the following is LEAST likely to be associated with a higher rate of economic growth?

(A) strong protection of property rights

(B) taxes on savings and investment

(C) policies that discourage immigration

(D) higher consumption

(E) encouraging the replenishment of natural resources

According to me, the answer should be (B). Taxes on investment will lead to lower economic growth, since $$\operatorname{rGDP} = C + I + G + XN$$ and more $I$, more economic growth.

Economic growth (for the purpose for High School Macroeconomics) means a right shift in PPC, so less investment, less innovation etc.

Can someone explain? Thanks

**Tags:** macroeconomics, economic-growth
> **Comments:**
> **username_1**: This question is similar to a recent question.  

---

## 1 answers

### Answer by username_2 on 2022-04-16. Score: 1 | Accepted answer

You are looking at the short term, this year's GDP. It is possible that investment results in a higher GDP later on, in subsequent years.

Since both investment and savings are taxed, people are not disincentivized from investing. However, if you people consume instead of investing then while this years GDP is unchanged, the GDP in subsequent years might be lower.

---

The question is a poor one though.

I would also have thought that they meant (B), because unless you notice that savings are also taxed, this seems like a textbook free markets question.

Also, the phenomena are not very detailed, thus assigning any likelihood is difficult.

> **Comments:**
> **username_0**: Hi @Giskard, Thank you for the answer. Option (C) also seems confusing. (For High School Macroeconomics), Won't discouraging immigration lead to slower economic growth?  
> **username_2**: Indeed. As I wrote, without details assigning any likelihood is difficult.  

---

