Question 1
A change in tax rates is likely to affect individuals' behavior regarding consumption and saving if
◦ the change is for one year only.
◦ the change is not too big.
◦ the change will not increase the budget deficit.
◦ the change is permanent.
Question 2
The opportunity cost of leisure will rise if
◦ the wage rate increases.
◦ the wage rate decreases.
◦ nonlabor income increases.
◦ nonlabor income decreases.