Any increase in the present value of taxes for the consumer implies
A) an increase in lifetime wealth and an increase in current labour supply.
B) an increase in lifetime wealth and a decrease in current labour supply.
C) a decrease in lifetime wealth and an increase in current labour supply.
D) a decrease in lifetime wealth and a decrease in current labour supply.
E) a decrease in lifetime wealth and a decrease in current consumption demand.

Question

Quizplus · Accepted Answer

An increase in the present value of taxes reduces lifetime wealth, prompting consumers to increase current labor supply to maintain their consumption levels.

Any Increase in the Present Value of Taxes for the Consumer