What is the definition and purpose of the payroll tax?
What will be an ideal response?
The payroll tax is a tax paid by both employees and employers on wages used to fund Social Security and Medicare. This tax is an example of how a government redistributes wealth for the public good. As payrolls increase in good economic times, payroll taxes rise along with the economy, helping the government meet its spending objectives for programs such as Social Security and Medicare.
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The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium
If the government establishes a $2 per gallon price ceiling to ensure that children are nourished, estimate the change in p, Q, and social welfare.
Which of these demonstrates a negative real shock causing a negative demand shock?
A. Fear among businesses causes them to lay off workers, who eventually return to work at lower wages. B. Bad news, like rising oil prices, causes investors to make more new investments, seeking greater profit opportunities. C. Bad news, like rising oil prices, causes people to become pessimistic and to cut back on their spending. D. Fear among businesses causes them to lay off workers, who lose their skills and become permanently less productive.
Marginal revenue is the additional revenue a business gets from producing or selling one more unit of input.
Answer the following statement true (T) or false (F)
Economists say that a firm has a normal profit when:
a. it earns a return of at least 10 percent. b. its accounting profit is positive. c. it can pay all its variable costs. d. its economic profit is zero.