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.
You might also like to view...
Any point representing a cost and output combination that is below the long-run average cost curve:
a) may represent actual cost and production levels in the short run. b) represents unattainable cost levels. c) is attainable only when all factors are variable. d) is attainable if the firm minimizes its costs according to the "principle of substitution". e) represents less efficient cost levels than points on the long-run average cost curve.
A vertical supply curve may be described as being
A) relatively elastic. B) perfectly inelastic. C) relatively inelastic. D) perfectly elastic.
Which is an example of the government command approach?
A. Fast-food franchise growth B. Public schools C. Private college education D. The growth of community banks
If demand is represented as Qd = 20 - 3P and supply is represented as Qs = 4 + 5P, the demand curve intersects the y axis at a price of ________ and the supply curve intersects the y axis at a price of ________
A. $3; $5 B. $24; $2 C. $17; $9 D. $20; $4