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Cuts in the Marginal Rate of Income Tax Are Claimed

Question 56

Essay

Cuts in the marginal rate of income tax are claimed to have various beneficial supply-side effects:
(a) People work longer hours because the substitution effect from cutting the marginal rate of income tax is
less than the income effect.
true/false
(b) More people wish to work.
true/false
(c) People work more enthusiastically.
true/false
(d) Both equilibrium and disequilibrium unemployment fall even when wages are inflexible downwards.
true/false
(e) Employm

Correct Answer:

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(a) False
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