In 2007, Germany Increased the Value Added Tax (VAT) on Consumption

question 115

Multiple Choice

In 2007, Germany increased the value added tax (VAT) on consumption from 16 percent to 19 percent. The supply-side view, this will

• A) increase the tax wedge and lower the incentive to work.
• B) decrease the tax wedge and lower the incentive to work.
• C) shift the labor supply curve to the right.
• D) increase the incentive to work in order to pay the higher tax.

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Definitions:

Dialectical Philosophers

Thinkers who apply dialectical methods to examine contradictions in society, thought, and history, aiming to understand and enact change.

Structural-Functionalists

Sociologists who focus on understanding society as a complex system, where its components work together to maintain cohesion and order.

Labor Theory of Value

An economic theory, most closely associated with Karl Marx, which posits that the value of a commodity is determined by the socially necessary labor time required for its production.

Exchange Value

The worth of a good or service determined by what it can be traded or exchanged for in the market.