If we compare the United States to France, we see that potential GDP per person in France is _______ than that in the United States because the French tax wedge is _______ than the U.S.tax wedge.

Question

Quizplus · Accepted Answer

A higher tax wedge means that workers in France receive less take-home pay compared to workers in the United States. This reduces incentives to work and invest, which can lower potential GDP per person in France compared to the United States. Therefore, potential GDP per person in France is expected to be less than that in the United States, making option D the correct choice.

If We Compare the United States to France, We See