You are the governors economic policy adviser. The governor wants to put in place
Chapter 0, Problem 13(choose chapter or problem)
You are the governors economic policy adviser. The governor wants to put in place policies that encourage employed people to work more hours at their jobs and that encourage unemployed people to find and take jobs. Assess each of the following policies in terms of reaching that goal. Explain your reasoning in terms of income and substitution effects, and indicate when the impact of the policy may be ambiguous. a. The state income tax rate is lowered, which has the effect of increasing workers after-tax wage rate. b.The state income tax rate is increased, which has the effect of decreasing workers after-tax wage rate. c. The state property tax rate is increased, which reduces workers after-tax income.
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