Refer to the following figure when answering
Figure 15.1: The Labor Market
-Consider Figure 15.1, which is a representation of the labor market. In 2008, China reduced its corporate tax rate from 33 percent to 25 percent; this would cause a shift from curve ________ because changes in taxes ________ in the stylized DSGE model.
A) $b \rightarrow a$; are similar to a change in TFP
B) $c \rightarrow d$; are the opposite of a change in income taxes
C) $a \rightarrow b$; are identical to a change in income taxes
D) $d \rightarrow c$; negatively affected by TFP
E) None of these answers are correct.

Question

Refer to the following figure when answering  
Figure 15.1: The Labor Market 
-Consider Figure 15.1, which is a representation of the labor market. In 2008, China reduced its corporate tax rate from 33 percent to 25 percent; this would cause a shift from curve ________ because changes in taxes ________ in the stylized DSGE model.
A) $b \rightarrow a$; are similar to a change in TFP 
B) $c \rightarrow d$; are the opposite of a change in income taxes 
C) $a \rightarrow b$; are identical to a change in income taxes 
D) $d \rightarrow c$; negatively affected by TFP 
E) None of these answers are correct.

Quizplus · Accepted Answer

A reduction in corporate tax rates would make it more attractive for firms to hire workers, leading to an increase in the demand for labor and a shift from curve b to curve a.

Refer to the Following Figure When Answering Figure b→ab \rightarrow ab→a

Refer to the Following Figure When Answering
Figure $b \rightarrow a$