The government of Florida is considering raising the state sales tax from the current 6% to 10% starting in January of next year. If the sales tax is applied to all goods, and the state government does not change the tax on labor income, what will likely happen?

Question

Quizplus · Accepted Answer

When the sales tax is raised and applied to all goods, consumers will likely decrease their demand for goods due to the increase in prices. This decrease in demand will lead to a decrease in production which will result in a decrease in the demand for labor. Therefore, the answer is B, the demand for labor will decrease.

The Government of Florida Is Considering Raising the State Sales