The government redistributes income by increasing the highest rate of income tax and then using the revenue collected to pay for extra benefits for students and unemployed people. Under which conditions will total spending in the economy rise by the greatest amount?
- Aincome elasticity of demand of top rate income taxpayers > 1; income elasticity of demand of students and the unemployed > 1
- Bincome elasticity of demand of top rate income taxpayers > 1; income elasticity of demand of students and the unemployed < 1
- Cincome elasticity of demand of top rate income taxpayers < 1; income elasticity of demand of students and the unemployed > 1
- Dincome elasticity of demand of top rate income taxpayers < 1; income elasticity of demand of students and the unemployed < 1