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If the Backward-Bending Supply Curve for Labor Has Relevance for Public

Question 38

Multiple Choice

If the backward-bending supply curve for labor has relevance for public finance,it is because _____.


A) at really high wage rates there will be insufficient labor to meet aggregate demand
B) there is a trade-off between leisure and labor
C) income taxes do no raise sufficient revenue to pay for public goods because individuals consume too much leisure
D) taxpayers are not receiving as much utility from public sector output as they are losing through the income effect associated with income taxes

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