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

Question

Quizplus · Accepted Answer

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

Any Increase in the Present Value of Taxes for the Consumer