Suppose the aggregate labor supply curve slopes upward and the income tax rate is increased.Economic theory predicts that the employment of labor will _____ and the after-tax "take-home" wage will _____.

Question

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The increase in income tax rate reduces the after-tax "take-home" wage, making work less attractive, which can lead to a decrease in the quantity of labor supplied (employment falls). Simultaneously, the after-tax wage that workers receive also falls due to the higher tax burden.

Suppose the Aggregate Labor Supply Curve Slopes Upward and the Income