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Suppose the Government Changed the Law So That the Employer

Question 42

Multiple Choice

Suppose the government changed the law so that the employer had to pay the entire amount of the social security tax.Furthermore,government interest payments increased and other changes in the law induced many sole proprietorships to incorporate.The net effect of these changes on gross domestic income would be


A) zero because none of the changes affect the measure of gross domestic income.
B) zero because the changes with positive effects exactly offset the changes with negative effects.
C) positive because of the change in interest payments.
D) positive because profits are part of gross domestic investment while proprietors' income is not;and the social security tax paid by employers is part of gross domestic income while the part paid by employees is not.

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