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The Government Increases the Sales Tax on All Goods

Question 238

Multiple Choice

The government increases the sales tax on all goods.The government does not change the tax on income earned from labor.What happens in the market for labor?


A) The quantity of labor demanded decreases, but the demand for labor does not shift.
B) The demand for labor decreases.
C) The supply of labor increases.
D) There is no change in the labor market.

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