Assume that Mr. Smith's income increased from $40,000 last year to $45,000 this year and that he paid an additional $2,000 in taxes. This would indicate that his marginal tax rate is
A) 10 percent.
B) 25 percent.
C) 30 percent.
D) 40 percent.
D
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Which of the following is true? i) A rational choice is made on the margin. ii) Microeconomics is the study of the national economy while macroeconomics is the study of the global economy. iii) Economists try to understand how the economic world works by testing normative statements.
A. Only ii B. i and ii C. Only iii D. i and iii E. Only i
Suppose the price of home heating oil is unchanged, yet we observe people purchasing 20% more than a year ago. Then
A) the demand for home heating oil has increased. B) the demand for home heating oil has decreased. C) the demand for home heating oil has remained unchanged—only quantity demanded changed. D) the law of demand has been proven false.
Which of the following is an example of capital?
a. pizza ovens b. bulldozers c. a college education d. carpentry skills e. all of the above
Tax distortions refer to the cost of inflation that comes from:
A. the money, time, and opportunity used to change prices to keep pace with inflation. B. the time, money, and effort one has to spend managing cash in the face of inflation. C. being penalized via taxes for making more money in dollars, even though real purchasing power hasn't changed at all. D. labor costs associated with inflation.