Which of the Following Reasons Might Explain, at Least in Part

question 11

Multiple Choice

Which of the following reasons might explain, at least in part, why changes in federal tax revenues tend to mitigate changes in aggregate demand?

• A) The federal income tax rate is computed as a proportion of disposable income.
• B) Federal income tax rates are progressive and thus increase with disposable income.
• C) All kinds of taxes discourage work and thus reduce GDP, but the income tax creates the smallest of these work disincentives.
• D) The federal income tax is constructed so that the middle-class taxpayer pays the largest share.
• E) None of the above.

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Definitions:

Psychological Attachment

Psychological attachment pertains to the emotional bond or connection that forms between individuals, often influencing their personal relationships and behaviors throughout life.

Party Identification

An individual's psychological attachment to or preference for a political party.

Ideology

A system of ideas and ideals, especially one that forms the basis of economic or political theory and policy.

Voter Turnout

The percentage of eligible voters who cast a ballot in an election, often used as a measure of political engagement.