Suppose social security contributions rise by $1 billion while social security benefits also rise by $1 billion. Further, personal income taxes fall by $500 million. As a result,

A. disposable income should increase while personal income and national income are unchanged.

B. national income, personal income, and disposable income should increase.

C. both personal and disposable personal income should increase.

D. personal income, disposable personal income, and national income remain unchanged.

Question

Alena Cunningham

Business

8 October, 02:52

Suppose social security contributions rise by $1 billion while social security benefits also rise by $1 billion. Further, personal income taxes fall by $500 million. As a result,

A. disposable income should increase while personal income and national income are unchanged.

B. national income, personal income, and disposable income should increase.

C. both personal and disposable personal income should increase.

D. personal income, disposable personal income, and national income remain unchanged.

+4

Answers (1)

Know the Answer?

Morgan Spence · Answer 1

The answer will be A

Explanation:

As the social security contributions and benefits remain the same in proportion, personal and national income will remain the same.

As disposable income is defined as personal income-personal taxes, and the personal income taxes fall by 500 million (included in the contibutions), this would mean that the disposable income increases.