The government introduces a tax incentive program in which the first $5000 of savings can be tax-deferred.

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The government introduces a tax incentive program in which the first $5000 of savings can be tax-deferred.b. Explain the income and substitution effects of this tax program for someone who is saving $1000 before the program is implemented.

The government introduces a tax incentive program in which the first $5000 of savings can betax-deferred.b. Explain the income and substitution effects of this tax program for someone who is…