If a Tax Is Placed on an Employer

question 2

Multiple Choice

If a tax is placed on an employer,

• A) workers will not have to pay the tax.
• B) both wages and employment levels will usually decrease.
• C) customers will not have to pay the tax.
• D) wages will decrease, but employment levels will increase.

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Definitions:

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset for a specific period of time.

Profitability Index

A financial ratio that measures the return on investment for a project by dividing the present value of future cash flows by the initial investment.

Invested Sum

The total amount of money allocated towards an investment or project.

Discount Factor

The discount factor is a multiplier that adjusts the future value of a cash flow to its present value, reflecting the time value of money.