A tax cut will unambiguously lower income-tax revenue
Indicate whether the statement is true or false
False. It depends on how the quantity of labor supplied responds to the increase in the after-tax wage rate. If the income effect dominates, the quantity of labor supplied falls and so will tax revenue. If the substitution effect dominates, the quantity of labor supplied increases, and income-tax revenue could increase. This is a function of whether the after-tax wage was low already because the tax rate was relatively high.
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Which of the following would tend to increase the price of lumber?
a. a technological advance that lowers the cost of cutting timber b. an increase in the demand for newly constructed homes c. a decrease in the demand for wooden rocking chairs d. a decrease in the tax imposed on firms who produce lumber
Which of the following would be most indicative of a shift to a more restrictive monetary policy?
a. Rapid expansion in the monetary base, higher short-term interest rates, and a decline in the growth rate of the M1 money supply. b. Rapid expansion in the monetary base, declining short-term interest rates, and an increase in the growth rate of the M2 money supply. c. A reduction in the monetary base, higher short-term interest rates, and a decline in the growth rate of the M2 money supply. d. A reduction in the monetary base, lower short-term interest rates, and a decline in the growth rate of the M1 money supply.
If a monopolist's marginal revenue exceeds its marginal cost at its current level of output, then to maximize its profit the monopolist should:
A. do nothing. B. increase output until marginal revenue equals marginal cost. C. increase output until price equals marginal cost. D. decrease output in order to increase the gap between marginal revenue and marginal cost.
When firms hold excess capital, the value of the multiplier decreases.
Answer the following statement true (T) or false (F)