An income tax _________potential GDP by shifting the_________ curve_________ .
A) increases; labor demand; rightward
B) decreases; labor demand; leftward
C) decreases; labor supply; leftward
D) increases; labor supply; rightward

Question

Quizplus · Accepted Answer

An income tax decreases potential GDP by shifting the labor supply curve leftward, as higher taxes reduce the incentive for individuals to work, thus decreasing the labor supply.

An Income Tax _________Potential GDP by Shifting The_________ Curve_________

An Income Tax _____Potential GDP by Shifting The_ Curve_____