An Increase in the Tax Rate on Wages Results in

question 7

Multiple Choice

An increase in the tax rate on wages results in

• A)both a lower equilibrium real wage and a lower equilibrium level of employment.
• B)no changes in the equilibrium real wage and the equilibrium level of employment.
• C)both a higher equilibrium real wage and a higher equilibrium level of employment.
• D)a higher equilibrium real wage and a lower equilibrium level of employment.
• E)a lower equilibrium real wage and a higher equilibrium level of employment.

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Definitions:

Production Possibility Frontier

A graphical representation showing the maximum combination of goods or services that can be produced with a given set of resources.

Technology Improvement

Technology Improvement refers to the enhancement or development of new technologies or the improvement of existing ones, leading to more efficient processes, products, or services.

Resources Increase

A rise in the availability of resources, such as capital, labor, and raw materials, which can lead to economic growth.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between the two commodities.