The Incentive to Consume Tax-Deductible Goods, Instead of Nondeductible Goods

Multiple Choice

The incentive to consume tax-deductible goods, instead of nondeductible goods, increases when

A) marginal tax rates are high.
B) marginal tax rates are low.
C) the inflation rate is low and relatively stable.
D) This is a trick question: the consumption of tax-deductible goods is not affected by marginal tax rates.