The Difference Between a Fixed Tax and a Variable Tax

question 193

Multiple Choice

The difference between a fixed tax and a variable tax is that

• A)fixed taxes can never be changed, but variable taxes can be changed.
• B)a change in fixed taxes has no effect on aggregate demand, but a change in variable taxes has an impact.
• C)a variable tax changes when GDP changes, but a fixed tax does not change with GDP.
• D)a variable tax can be changed easily, whereas changing fixed taxes requires a constitutional amendment.

---

Definitions:

Production's Need

The requirements necessary for the production process, including materials, labor, and capital.

Consumption's Need

This term could relate to the requirement or demand for goods and services by individuals or households in an economy, but without more context, it's broadly related to consumer behavior.

Available Savings

The amount of money that remains after all spending, taxes, and financial obligations have been accounted for.

Savings Dollars

Funds that are saved and set aside for future use instead of being spent.