What Happens to the Acceptable Wage Rate at Each Level

question 83

Multiple Choice

What happens to the acceptable wage rate at each level of employment once an income tax is levied on labour income?

• A) It increases by the amount of the tax that must be paid.
• B) Because workers have to work more to make up for the tax, the acceptable wage rate falls by some amount that cannot be determined.
• C) Workers and employers split the tax, so the acceptable wage increases by half the tax.
• D) Because workers have to work more to make up for the tax, the acceptable wage rate falls by the precise amount of the tax that must be paid.
• E) Nothing, it remains the same.

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Definitions:

Raw Materials

Fundamental materials that are used in the production process to create goods and products.

Prices of Raw Materials

The cost of basic materials used in the manufacture of products, which can affect production costs and pricing strategies.

Fiscal Policy

Government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth.

Increased Taxes

A financial situation where a government raises the rates of taxes, affecting individuals or businesses.