Suppose that the substitution effect of an increase in the


Question: Suppose that the substitution effect of an increase in the wage is always larger than the income effect. Suppose the economy is on the high tax side of the Laffer curve. Now suddenly the country goes to a war and government needs to raise tax revenue to finance the war. What should the government do with tax rate?

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Microeconomics: Suppose that the substitution effect of an increase in the
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