Use the Following to Answer Questions

question 186

Multiple Choice

Use the following to answer questions:
-(Table: Taxes, Spending, and Income) Look at the table Taxes, Spending, and Income. Suppose Governor Meridias decides to initiate a state tax of 5% on all sales. A poor household will spend _____ of its annual income on the sales tax, while a wealthy household will spend _____ of its annual income.

• A) 4.5%; 4%
• B) 5%; 5%
• C) 5%; 3.5%
• D) 3.5%; 4.5%

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Definitions:

Ending Balance

The amount in an account at the end of an accounting period after all debits and credits have been accounted for.

Cash Account

An account that records cash transactions involving the inflows and outflows of cash.

Ending Balance

The final amount in an account at the end of a period, reflecting all transactions.

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company. This includes the cost of the materials and labor directly used to create the good.