An increase in income taxes _______ the tax wedge, and an increase in taxes on consumption expenditure _______ the tax wedge. A. increases; increases B. increases; does not change C. decreases; decreases D. does not change; increases

Macroeconomics: Private and Public Choice (MindTap Course List)
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ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter12: Fiscal Policy, Incentives, And Secondary Effects
Section: Chapter Questions
Problem 12CQ
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How do income taxes and taxes on consumption expenditure influence the tax wedge?
 
An increase in income taxes _______ the tax wedge, and an increase in taxes on consumption expenditure _______ the tax wedge.
 
 
A.
increases; increases
 
B.
increases; does not change
 
C.
decreases; decreases
 
D.
does not change; increases
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