68. Supply-side economic studies indicate thata. Marginal income tax rates of about 20% start to reduce incentive to work.b. Marginal income tax rates of about 30% start to reduce incentive to work.c. Marginal income tax rates of about 40% start to reduce incentive to work.d. Marginal income tax rates of about 50% start to reduce incentive to work.e. Marginal income tax rates of about 60% start to reduce incentive to work.69. Suppose that households supply 500 billion hours of labor per year and have a tax elasticity ofsupply of 0.16. If the tax rate is increased by 19.6% from 20% to 39.6%, use the formula tocalculate by how many hours the labor supply will decline.a. The number of labor hours supplied will decline by 28.67 billion.b. The number of labor hours supplied will decline by 1.568 trillion.The number of labor hours supplied will decline by 2.465 trillion.d. The number of labor hours supplied will decline by 3.422 trillion.e. The number of labor hours supplied will decline by 9.183 trillion.с.70. If the tax elasticity of supply is 0.4, calculate by how much tax rates on middle-income earners mustbe reduced to increase the labor supply by 2.5%.16.0% tax cut is needed.a.b. 8.75% tax cut is needed.6.25% tax cut is needed.C.d. 4.32% tax cut is needed.e. 2.74% tax cut is needed.

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68. Supply-side economic studies indicate that a. Marginal income tax rates of about 20% start to reduce incentive to work. b. Marginal income tax rates of about 30% start to reduce incentive to work. c. Marginal income tax rates of about 40% start to reduce incentive to work. d. Marginal income tax rates of about 50% start to reduce incentive to work. e. Marginal income tax rates of about 60% start to reduce incentive to work.

68. Supply-side economic studies indicate that a. Marginal income tax rates of about 20% start to reduce incentive to work. b. Marginal income tax rates of about 30% start to reduce incentive to work. c. Marginal income tax rates of about 40% start to reduce incentive to work. d. Marginal income tax rates of about 50% start to reduce incentive to work. e. Marginal income tax rates of about 60% start to reduce incentive to work.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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