A Politician Proposes to Increase the Income Tax on Top

question 90

Multiple Choice

A politician proposes to increase the income tax on top earners.He claims this will increase private sector economic output.This claim

• A) does not make sense.Income and output are interconnected.Taxing one is effectively a tax on the other.
• B) does not make sense; income tax does not affect economic output.
• C) makes sense; more taxes will increase government spending and help the economy.
• D) makes sense; more taxes on top earners will improve productivity of lower earners.
• E) might make sense; if the tax policy is structured correctly,it can incentivize economic activity.

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Definitions:

Industrialization

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods.

Chicago School

An economic theory advocating for free-market capitalism, emphasizing minimal government intervention.

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Aspects and characteristics of living in densely populated, highly developed areas known as cities or towns.

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Researchers in the social sciences focusing on the examination of human societal structures, their interrelations, and the dynamic processes that maintain or alter these structures.