Table 32 -The Table Below Shows Tax Payments Made for Various Incomes

question 98

Multiple Choice

Table 3.2
$$\begin{array}{l}\text { Table } 3.2\\\begin{array} { | l | r | r | r | } \hline \text { Taxable income } & \$ 5,000 & \$ 10,000 & \$ 20,000 \\\hline \text { Tax payments } & \$ 500 & \$ 900 & \$ 1,600 \\\hline\end{array}\end{array}$$
-The table below shows tax payments made for various incomes. According to the information in the table below, the tax system is _____

• A) progressive at all levels of income.
• B) proportional for income levels between $10,000 and $20,000.
• C) regressive.
• D) based on the benefits-received principle.
• E) proportional for income levels between $5,000 and $10,000.

Recognize the roles of taxes, imports, and household production in the circular flow of income and expenditure model.

Calculate and interpret the inflation rate using the consumer price index (CPI).

Assess the limitations of Gross Domestic Product (GDP) as a measure of social welfare and economic growth.

Understand the methodology and significance of the value added approach in GDP calculation to avoid double counting.

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Definitions:

Excess Capacity

A situation where a firm is operating below its maximum output level, indicating that it has available resources that are not being fully utilized.

Economic Profits

The offset between gross income and total liabilities, embracing both visible and hidden expenses.

Excess Capacity

The situation in which a firm operates below its maximum potential production level, indicating underutilization of resources.

Monopolistic Competition

A market scenario characterized by the presence of many companies offering differentiated products, permitting some level of pricing power.