In 2003, Ireland Reduced Its Corporate Tax Rate from 16

Multiple Choice

In 2003, Ireland reduced its corporate tax rate from 16 percent to 12.5 percent. In labor markets this would ________, which would ________.

A) cause an increase in labor demand; push real wages up
B) cause an increase in labor supply; push down nominal wages
C) have no impact on labor markets; have no effect on inflation
D) increase TFP; push real wages up
E) cause a decreased demand for labor; cause price stickiness