Tax Policy.
Answer the multiple choice questions below. For each question, only one answer is correct.
6A.
Labor supply elasticity measures
the percentage change in hours worked in response to a percentage change in job postings.
the percentage change in hours worked in response to a percentage change in salary.
the percentage change in salary in response to a percentage change in job postings.
the percentage change in salary in response to a percentage change in the hours worked.
6B.
Suppose we would find conclusive evidence that the current income tax rate is on the decreasing, right-hand side of the Laffer curve. Then, the best policy change would be
to increase income taxes because this would likely lead to higher tax revenue.
to increase income taxes because this would likely lead to more hours worked.
to decrease income taxes because this would likely lead to more hours worked, even though it would also lower tax revenue.
to decrease income taxes because this would likely lead to more hours worked and higher tax revenue.
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