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Assume the price of consumption is $1 per unit and the tax on earnings is proportional (i.e., a flat tax). If the tax rate increases
Assume the price of consumption is $1 per unit and the tax on earnings is proportional (i.e., a flat tax). If the tax rate increases from 20 percent to 40 percent, then Group of answer choices the budget line shifts down by 20 percent. the slope of the budget line falls (in absolute value) from .8w to .6w. the endowment point falls by 20 percent. nonlabor income drops to 40 percent
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