One Way to Increase Labor Force Participation Is to Cut

question 30

Multiple Choice

One way to increase labor force participation is to cut income tax rates.Which of the following is true given such a scenario?

• A) Cutting income tax rates increases labor force participation and also allows all other taxes to be cut
• B) Cutting income tax rates may force the government to raise other taxes or cut some programs
• C) Cutting income tax rates raises more tax revenue and allows for even more government programs
• D) Cutting income tax rates puts the burden of the tax cuts on those who now join the labor force.
• E) Cutting income tax rates reduces labor force participation.

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Definitions:

After-Tax Discount Rate

A discount rate that has been adjusted to reflect the impact of taxes.

Straight-Line Depreciation

A technique for determining the depreciation of an asset through uniformly distributing its cost across its lifespan.

Operating Cash Inflow

The cash generated from a company's normal business operations, reflecting its ability to generate consistent earnings.

After-Tax Discount Rate

The rate of return on an investment after adjusting for taxes, used in net present value and other discounted cash flow analyses.