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

Question

Quizplus · Accepted Answer

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

Any Increase in the Present Value of Taxes Implies