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:

Growth Opportunities

Potential scenarios or investments that could lead to an increase in business scale, revenue, or profits.

No-growth Value

The value of a company assuming that it will not experience any future growth in earnings or dividends.

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in any given jurisdiction.

Leeway

The amount of freedom to move or act that is available; in finance, it often refers to the flexibility allowed in making investment decisions or adjustments.