A tax whose burden, expressed as a percentage of income, increases as income increases is
A. an ability-to-pay tax.
B. a proportional tax.
C. a progressive tax.
D. a regressive tax.
Answer: C
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Suppose an investment bank has a leverage ratio of 10 and the value of its securities decline by 10%. What happens to its return on equity investment?
A) declines by 1% B) increases by 1% C) declines by 100% D) increases by 100%
Historically, stocks have offered higher rates of return than bonds
a. True b. False Indicate whether the statement is true or false
According to the text, one of the ways to solve the public good problem is
A. finding ways of forcing people to pay for the good. B. not to provide the good at all. C. to allow private firms in free markets to provide the good for a fee. D. for the government to provide the good for free by using a compulsory tax.
Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. If the long-run supply curve is horizontal, then
A) some firms will enjoy long-run profits because they operate at minimum average cost. B) the long-run price will be $0.20 per pound. C) each consumer will purchase $100 worth of potatoes. D) the long-run price will be set just above $0.20 per pound.