If a $100,000 Household Consumes 50 Percent of Its Income

question 59

Multiple Choice

If a $100,000 household consumes 50 percent of its income whereas a $10,000 household consumes 90 percent of its income,then a 5 percent sales tax

• A) affects both households equally.
• B) effectively taxes the income of the low-income household at the rate of 4.5 percent and the income of the high-income household at 2.5 percent.
• C) taxes the incomes of both households at the rate of 5 percent.
• D) costs the low-income household $500 per year and the high-income household $5,000 per year; therefore, a greater burden is placed on the high-income household.
• E) effectively duplicates the impact of a rising marginal tax rate.

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Definitions:

Haploid

A cell or nucleus having a single set of unpaired chromosomes, typically found in gametes of sexually reproducing organisms.

Haploid Cell

A cell that contains only one set of chromosomes, typically seen in gametes.

Gamete

A mature haploid male or female germ cell which is able to unite with another of the opposite sex in sexual reproduction to form a zygote.

Spore

A unit of sexual or asexual reproduction that may be adapted for dispersal and for survival, often for extended periods of time, in unfavorable conditions.