If the Labor Supply Curve Is Nearly Vertical,a Tax on Labor

question 20

Multiple Choice

If the labor supply curve is nearly vertical,a tax on labor

• A)has a large deadweight loss.
• B)raises a small amount of tax revenue.
• C)has little impact on the amount of work that workers are willing to do.
• D)results in a large tax burden on the firms that hire labor.

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Definitions:

Aggregate Demand

A sum of needs for every good and service across an economy, measured at a particular aggregate price level within a set time period.

Consumer Spending

The sum of expenditures made by all households in an economy on various goods and services.

Investment Spending

Expenditures on physical assets like machinery, buildings, and infrastructure, or on inventory, which are intended to yield productive benefits in the future.

Keynesians

A group of economists who advocate for active government intervention in the economy, especially during recessions, to manage demand through fiscal and monetary policies.