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

Question

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The question is asking about potential GDP per person, which is the maximum output a country can produce with full employment and without inflation. The French tax wedge is the difference between the total cost of labor to the employer and the net income received by the employee, expressed as a percentage of the total cost of labor. The higher the tax wedge, the lower the incentive to work and invest, which can lead to lower potential GDP. Therefore, if the French tax wedge is larger than the U.S. tax wedge, we would expect potential GDP per person in France to be less than that in the United States.

If We Compare the United States to France, We See