The sales tax is a regressive tax because the:
A. percentage of income paid as taxes falls as income rises.
B. administrative costs associated with the collection of the tax are relatively high.
C. percentage of income paid as taxes is constant as income rises.
D. tax tends to reduce the total volume of consumption expenditures.
Answer: A
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Which of the following is not a function of money?
a. store of value b. medium of exchange c. standard of quality d. standard of deferred payment
If real GDP is greater than planned aggregate spending:
A. real GDP will fall. B. unplanned inventory investment is negative. C. real GDP will rise. D. the economy is in equilibrium.
If the supply of and demand for a product decrease at the same time, then equilibrium
A) quantity and equilibrium price must both decline. B) quantity must decline, but equilibrium price may either rise, fall, or remain unchanged. C) price must fall, but equilibrium quantity may either rise, fall, or remain unchanged. D) quantity must fall and equilibrium price must rise.
M1 has decreased in its usefulness in understanding inflation due to:
A. more reliance on the use of currency. B. the increased use of checks in the economy. C. the introduction of money market mutual fund shares and similar checking substitutes. D. the increased use of electronic payments.