In an Effort to Balance the Federal Budget, an Increase

question 41

Multiple Choice

In an effort to balance the federal budget, an increase in Social Security taxes is passed.What is the most likely effect of this on equilibrium GDP?

• A)GDP will increase.
• B)GDP will decrease.
• C)GDP will not change but prices will rise.
• D)GDP will not change but employment will increase.

---

Definitions:

Dividends Account

An account in a company's financial records where dividend payments are recorded, reflecting distribution of profits to shareholders.

Debit Balance

A situation in accounting where the sum of debits exceeds the sum of credits, often indicating the amount owed or an asset's value.

Debt Ratio

A financial ratio that measures the extent of a company's or individual's leverage, calculated by dividing total liabilities by total assets.

Services Revenue

Income earned by a company through the provision of services to customers.