- 6 A Reduction Of Taxes On Wages Earned Would Induce A Person To Work More Hours Assuming A Tax Rates Were High B The 1 (196.4 KiB) Viewed 27 times
6. A reduction of taxes on wages earned would induce a person to work more hours, assuming a. Tax rates were high b. Their labor supply curve slopes up c. Their labor supply slopes down d. Their labor supply curve is vertical e. The income effect is greater than the substitution effect. I 7. Your grandmother gives you $500 per month in cash while you attend college. Which of the following is/ are with respect to the impact on your labor-leisure decisions? a. The $500 will rotate upward your budget constraint, making the slope steeper. b. The $500 will shift outward (and up) your budget constraint, but the slope does not change. c. The $500 triggers a substitution effect that will make you work more. d. The $500 triggers an income effect that will make you work less.