A Sales Tax Applied to All Consumer Purchases Would Be

question 10

Multiple Choice

A sales tax applied to all consumer purchases would be considered a __________ tax because __________.

• A) proportional;the percentage of income spend on consumption is constant as income rises
• B) regressive;the percentage of income spent on consumption declines as income rises
• C) regressive;the sales tax percentage is the same for all consumers
• D) progressive;the percentage of income spent on consumption rises as income rises
• E) progressive;the amount paid in sales tax rises with income

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Definitions:

Total Consumption

The aggregate amount of goods and services consumed by individuals and entities in an economy.

Total Saving

The aggregate saving in an economy, comprising both private saving by households and public saving by the government.

Aggregate Supply Curve

A graphical representation showing the relationship between the total production of goods and services at various price levels in an economy.

Aggregate Demand

The overall appetite for goods and services in an economic context, identified at a certain price norm and during a fixed time span.