Pat Calculates That for Every Extra Dollar She Earns,she Owes

question 192

Multiple Choice

Pat calculates that for every extra dollar she earns,she owes the government 33 cents.Her total income now is $35,000,on which she pays taxes of $7,000.Determine her average tax rate and her marginal tax rate.

• A) Her average tax rate is 33% and her marginal tax rate is 20%.
• B) Her average tax rate is 20% and her marginal tax rate is 33%.
• C) Her average tax rate is 20% and her marginal tax rate is 20%.
• D) Her average tax rate is 33% and her marginal tax rate is 33%.

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Definitions:

Nominal GDP

The gross domestic product measured at current market prices, not adjusted for inflation, representing the value of all finished goods and services produced within a country's borders in a specific time period.

Real GDP

Real GDP, or Gross Domestic Product adjusted for inflation, measures the value of all final goods and services produced by an economy in a given period, providing a more accurate economic growth figure.

GDP Deflator

An economic metric that converts output measured at current prices into constant-dollar GDP, allowing for the comparison of economic productivity over time by removing the effect of inflation.

GDP Deflator

A valuation of the price tiers for all new, domestic-origin, final goods and services within an economic setting.