In response to the economic crisis in 2008, President Merkel ʺhighlighted in her speech what the German government has already done: a financial sector rescue package worth up to €500 billion, and a proposed stimulus package of tax breaks [on income] and spending measures aimed at triggering investments of up to €50 billion over the next two years. Which parts of the stimulus plan will increase labor supply?

Question

Quizplus · Accepted Answer

Tax breaks are likely to increase labor supply by reducing the cost of employment for firms, which may encourage them to hire more workers. The financial sector rescue package and spending measures targeted at investment may indirectly stimulate job creation, but their impact on labor supply is less direct compared to tax breaks.

In Response to the Economic Crisis in 2008, President Merkel