Answer the following question that examines the impact of government policies on the distribution of earnings.

a) Analyze how increasing the investment tax credit given to firms that make expenditures on new capital affects the dispersion of earnings.

b) Describe the expected effects that college scholarships based on (i) student ability, and (ii) student need are likely to have on the distribution of earnings.

c) Proposals to tax health and other employee benefits, which are not now subject to the income tax, have been made in recent years. Assuming that more highly paid workers have higher employee benefits analyze the effects on measured earnings inequality if these tax proposals are adopted. Assume that fringe benefits are seldom included in the measures of earnings used to calculate earnings inequality