Indy currently earns $50,000 in taxable income and pays $8,000 in taxes. Suppose that Indy faces a marginal tax rate of 25 percent and his boss offers him a raise of $2,000 per year. Indy should:
A. accept the raise because his after-tax income will rise by $1,500.
B. reject the raise because his after-tax income will fall by $3,000.
C. reject the raise because his after-tax income will fall by $4,500.
D. reject the raise because his after-tax income will fall by $6,000.
Answer: A
Economics
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