What could result in an increase of consumption demand and a decrease in labor supply?
A) a drop in current taxes
B) an increase in future taxes
C) a decrease in total factor productivity
D) an increase in government expenses

Question

Quizplus · Accepted Answer

A drop in current taxes would imply that consumers have more disposable income available to spend, which would increase consumption demand. However, a decrease in labor supply would likely occur if workers decide to work fewer hours or stop working altogether due to the increased availability of leisure time. None of the other options listed would necessarily result in an increase in consumption demand and a decrease in labor supply.

What Could Result in an Increase of Consumption Demand and a Decrease