Suppose a Country Has a Consumption Tax That Is Similar

Multiple Choice

Suppose a country has a consumption tax that is similar to a state sales tax.If its government were to eliminate the consumption tax and replace it with an income tax that includes an income tax on interest from savings,what would happen?

A) There would be no change in the interest rate or saving.
B) The interest rate would decrease and saving would increase.
C) The interest rate would increase and saving would decrease.
D) None of the above is correct.