Which of the Following Statements About the Substitution Effect of an Income

question 15

Multiple Choice

Which of the following statements about the substitution effect of an income tax rate increase is false?

• A) The substitution effect is theoretically stronger for high-income taxpayers than for low-income taxpayers.
• B) The substitution effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner.
• C) The substitution effect is theoretically stronger for self-employed individuals who control their own time than for employees whose work schedules are controlled by their employers.
• D) None of these choices are false.

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