A study by Edward Prescott found that the ________ marginal tax rates in the United States relative to Europe resulted in a ________ quantity of labor supplied in the United States.
A)higher; larger
B)lower; larger
C)higher; smaller
D)lower; smaller

Question

Quizplus · Accepted Answer

Prescott's study concluded that lower marginal tax rates in the United States, compared to Europe, led to a larger quantity of labor supplied in the U.S. This is because lower taxes increase the incentive for work by allowing individuals to keep more of their earnings.

A Study by Edward Prescott Found That the ________ Marginal