Suppose That a Simple Tax System Were to Assess No

question 36

Multiple Choice

Suppose that a simple tax system were to assess no tax up through $10,000, a 10 percent rate for income between $10,000 and $20,000, and a 20 percent rate on every dollar earned above $20,000. If inflation were to run at 10 percent for a year, then indexing would cause the 10 percent bracket to

• A) run from $10,000 to $22,000 if the tax schedule were indexed.
• B) hold fixed from $10,000 to $20,000 despite the indexing because the tax would remain proportional within the 10 percent bracket.
• C) run from $11,000 to $22,000 if the tax schedule were indexed.
• D) be narrowed, but its precise boundary points cannot be determined from the information provided.
• E) none of the above.

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Definitions:

Moving Costs

Expenses incurred by individuals or companies when relocating from one place to another, including transportation and packing costs.

Domestic Output

The total value of all goods and services produced within a country's borders in a specific time period, also known as Gross Domestic Product (GDP).

Migration Labor

The movement of workers from one region or country to another in search of better employment opportunities.

Explicit Cost

Funds transferred to parties outside of the company as part of its operational expenses, encompassing staff wages, property lease payments, and material purchases.