5. Suppose that California imposes a sales tax of 10 percent on all goods and services. A...
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5. Suppose that California imposes a sales tax of 10 percent on all goods and services. A Californian named Ralph then goes into a home improvement store in the state capital of Sacramento and buys a leaf blower that is priced at $200. With the 10 percent sales tax, his total comes to $220. How much of the $220 paid by Ralph will be counted in the national income and product accounts as private income (employee compensation, rents, interest, proprietor’s income, and corporate profits)? LO27.3
a. $220.
c. $180.
b. $200.
d. None of the above.
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