In 2007, Germany Increased the Value Added Tax VAT) on Consumption

Multiple Choice

In 2007, Germany increased the value added tax VAT) on consumption from 16 percent to 19 percent. The supply-side view, this will ____________.

A) shift the labor supply curve to the right.
B) decrease the tax wedge and lower the incentive to work.
C) increase the incentive to work in order to pay the higher tax.
D) increase the tax wedge and lower the incentive to work.