Exhibit 6-31 Assume That a Consumer Is Initially in Equilibrium

question 24

Multiple Choice

Exhibit 6-31 Assume that a consumer is initially in equilibrium at point a in Exhibit 6-31.Then the price of good B falls.The movement from point a to point c represents

• A)the substitution effect
• B)the income effect
• C)the substitution effect minus the income effect
• D)the sum of the substitution and income effects
• E)the income effect minus the substitution effect

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Definitions:

FUTA Tax

The Federal Unemployment Tax Act (FUTA) tax is a payroll tax paid by employers to fund state workforce agencies and unemployment insurance.

State Unemployment Taxes

Taxes paid by employers to their state government to fund unemployment insurance benefits for workers who have lost their jobs.

Payroll Tax

Taxes imposed on employers or employees, usually calculated as a percentage of the salaries that employers pay their staff.

Schedule H

A form filed with the IRS to report taxes owed on wages paid to a household employee.