In October 2008, President Bush enacted the Alternative Minimum Tax Relief Act of 2008, which resulted in lower taxes on labor income. According the supply-side view, this would result in
A) a rightward shift in the supply of labor curve.
B) a leftward shift in the supply of labor curve.
C) an increase in the tax wedge.
D) a movement along the supply of labor curve.

Question

Quizplus · Accepted Answer

According to the supply-side view, lowering taxes on labor income would increase the after-tax return to work, which would incentivize individuals to supply more labor. This would result in a rightward shift in the supply of labor curve.

In October 2008, President Bush Enacted the Alternative Minimum Tax