Firms may react to a payroll tax by
A. substituting labor for capital.
B. shifting to less capital intensive techniques.
C. hiring more labor.
D. reducing their output.
Answer: D
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Expanding, contracting, and managing the money supply is easier for a central bank under the gold standard
Indicate whether the statement is true or false
If workers are in the backward-bending section of their labor supply curves, than an increase in the income tax rate will
A) increase the tax revenue and increase the number of hours worked. B) increase the tax revenue and decrease the number of hours worked. C) decrease the tax revenue and increase the number of hours worked. D) decrease the tax revenue and decrease the number of hours worked.
Which of the following is true of government purchases? a. Government purchases are independent of the price level
b. Government purchases are independent of the level of real GDP. c. Government purchases are independent of consumption. d. Government purchases are independent of investment. e. Government purchases are independent of the amount saved by households.
Deficit spending occurs when
A. Net export spending alters macroeconomic outcomes. B. Consumers spend less than their income. C. Investment spending declines. D. Government spending becomes greater than the tax revenues collected.