When income taxes fall,the supply of labor curve shifts rightward,ultimately leading to the LRAS curve shifting leftward.

Question

Quizplus · Accepted Answer

The statement is not accurate as a decrease in income taxes would result in an increase in after-tax income, which in turn would likely increase the demand for labor, resulting in a rightward shift of the labor demand curve. The LRAS curve represents the long-run potential of an economy to produce goods and services, and is mainly influenced by factors such as technology, capital accumulation, and labor force growth. Therefore, tax policies are not likely to directly impact the LRAS curve.

When Income Taxes Fall,the Supply of Labor Curve Shifts Rightward,ultimately