A family that earns $20,000 a year pays $200 a year in clothing taxes. A family that earns $40,000 a year pays $800 a year in clothing taxes. The clothing tax is a ________ tax.
A. progressive
B. regressive
C. proportional
D. benefits-received
Answer: A
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Suppose you borrow $1,000 to purchase a car. Which of the following correctly represents the changes in your personal balance sheet after the bank lends the money, but before you spend it?
a. Assets: loan, +$1,000 . Liabilities and net worth: checking deposit, +$1,000 b. Assets: loan, -$1,000 . checking deposit, +$1,000 . Liabilities and net worth: no change c. Assets: loan, +$1,000 . checking deposit, -$1,000 . Liabilities and net worth: no change d. Assets: checking deposit, +$1,000 . Liabilities and net worth: loan, +$1,000 e. Assets: checking deposit, +$1,000 . Liabilities and net worth: loan, -$1,000
The largest component of aggregate expenditure is
a. consumption spending b. investment spending c. government purchases d. net exports e. a virtual tie between consumption spending and government purchases
According to Friedman and Phelps, the unemployment rate is above the natural rate when actual inflation
a. is greater than expected inflation. b. is less than expected inflation. c. equals expected inflation. d. low whether its greater than or less than expected.
If a person drives with less care after purchasing auto insurance, this situation would be an example of a(n):
A. Reverse wealth problem B. Negative externality problem C. Adverse selection problem D. Moral hazard problem