If you save less because the government is going to tax you and later provide you with a benefit, then this reduction in savings is referred to by economists as the
A)slovenly effect.
B)bequest effect.
C)induced retirement effect.
D)asset substitution effect.

Question

Quizplus · Accepted Answer

The reduction in savings that occurs when individuals expect the government to tax them and then provide a benefit later is known as the asset substitution effect. This refers to individuals substituting government-provided benefits for their own savings, reducing the amount they save. The other options (slovenly effect, bequest effect, and induced retirement effect) do not accurately describe this particular phenomenon.

If You Save Less Because the Government Is Going to Tax