MCQOPTIONS
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| 1. |
According to supply-side economists, as tax rates are reduced, labor supply should increase. This implies that ? |
| A. | there is no income effect when tax rates are changed |
| B. | the income effect of a wage change is greater than the substitution effect of a wage change. |
| C. | there is no substitution effect when tax rates are changed |
| D. | the substitution effect of a wage change is greater than the income effect of a wage change |
| Answer» E. | |