For 2011,the federal government reduced the Social Security tax on workers by 2 percentage points.This will likely cause

Question

Quizplus · Accepted Answer

A reduction in the Social Security tax on workers will increase their net take-home pay, which will increase the quantity of workers employed due to the income effect. This will also decrease deadweight loss as there will be a smaller distortion in the labor market caused by the tax. The demand for labor is generally less elastic than the supply of labor, meaning that a reduction in the tax will have a greater effect on increasing the quantity of workers employed than on decreasing their wage. therefore Choice (A) is the best answer.

For 2011,the Federal Government Reduced the Social Security Tax on Workers