Use the Figure Below to Answer the Following Question

question 81

Multiple Choice

Use the figure below to answer the following question.
Figure 6.3.3
-Refer to Figure 6.3.3.The graph shows the effect of _______ As a result _______.

• A)an increase in the population; potential GDP increases and potential GDP per hour of labour decreases
• B)a decrease in the population; potential GDP decreases and potential GDP per hour of labour increases
• C)an increase in labour productivity; potential GDP increases and potential GDP per hour of labour does not change
• D)an increase in labour productivity; potential GDP increases and potential GDP per hour of labour decreases
• E)an increase in labour productivity; potential GDP and potential GDP per hour of labour increase

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Definitions:

Regressive

Refers to a tax system where the tax rate decreases as the taxable amount increases, often placing a higher burden on lower-income earners.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare among entities, determining who ultimately bears the cost of the tax.

Burden

The load, duty, responsibility, or stress placed upon an individual or entity.

Distribution of Income

The way in which a nation’s total earnings are divided among its population, or the way in which wealth is shared amongst individuals.