Which of the Following Statements About a Payroll Tax Is

question 9

Multiple Choice

Which of the following statements about a payroll tax is true?

• A) It reduces the quantity demanded of workers if the supply of labour is perfectly inelastic.
• B) It generally reduces the quantity demanded of workers.
• C) It is borne entirely by employers if demand is perfectly inelastic.
• D) It is borne entirely by workers if the supply of labour is perfectly elastic.
• E) It is shared equally between workers and employers.

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Definitions:

Money Supply

The aggregate financial assets at a specific time in an economy.

Price Rise

An increase in the cost of goods or services, often reflecting factors like inflation, increased production costs, or higher demand.

Real Factors

Real factors typically refer to tangible inputs and conditions affecting economic outcomes, such as resources, technology, and workforce skills, as opposed to financial inputs.

Quantity Theory

An economic theory proposing a direct relationship between the amount of money in an economy and the level of prices of goods and services.