Suppose the Government Grants Child Care Subsidies to Mothers Entering

question 161

Multiple Choice

Suppose the government grants child care subsidies to mothers entering the labour force.What is likely to happen to the equilibrium wage and quantity of labour?

• A)The equilibrium wage and the equilibrium quantity of labour rise.
• B)The equilibrium wage and the equilibrium quantity of labour fall.
• C)The equilibrium wage falls and the equilibrium quantity of labour rises.
• D)The equilibrium wage rises and the equilibrium quantity of labour falls.

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Definitions:

FICA Tax

A United States federal payroll tax that funds Social Security and Medicare, deducted from employees’ paychecks and matched by employers.

Federal Income Tax

A tax levied by the United States Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities.

Withholding Allowance

A portion of an employee's salary that is not included in their taxable income, used to account for personal exemptions and dependents, essentially reducing the amount of income tax withheld from their paycheck.

Federal Income Tax

The tax imposed by the U.S. government on the income generated by businesses and individuals within its jurisdiction.