Suppose that California imposes a sales tax of 10 percent on all goods and services. A Californian

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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 is in the national income and product accounts as private income (employee compensation, rents, interest, proprietor’s income, and corporate profits)?

a. $220

b. $200

c. $180

d. none of the above

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Macroeconomics

ISBN: 9781264112456

22nd Edition

Authors: Campbell McConnell, Stanley Brue, Sean Flynn

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