Author Question: What is productivity? How does a country's standard of living relate to productivity? What will ... (Read 59 times)

bobbie · **on:** Jun 29, 2018

What is productivity? How does a country's standard of living relate to productivity?

What will be an ideal response?

Question 2

Employers withhold several taxes from employees ' paychecks, one of which is FICA. Congress requires employers to pay half of the FICA tax and workers to pay the other half.

Does this mean that the burden of the FICA tax falls evenly on employers and employees? Briefly explain.

ynlevi · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Productivity refers to the amount of goods and services produced per worker. Per capita real GDP increases only if productivity increases, so, increases in a country's standard of living are tied to increases in productivity.

Answer to Question 2

Most economists believe that even though employers and employees each pay half of the FICA tax, the burden of the tax falls almost entirely on employees. The forces of demand and supply working in the labor market determine the incidence of the tax, not Congress, so even though the tax is paid evenly by employers and employees, this does not mean that the burden is shared equally.