In Econoland in 2000, People with Incomes Between $20,000 and $30,000

question 7

Multiple Choice

In Econoland in 2000, people with incomes between $20,000 and $30,000 paid 12% of their income in taxes and people with incomes between $30,001 and $40,000 paid 15%. In 2000, the CPI in Econoland equaled 1.20, and it increased to 1.26 in 2001. If the government of Econoland wants to keep households with a given real income from being pushed up into a higher tax bracket by inflation, the $20,000-to-$30,000 bracket will be changed in 2001 to:

• A) $15,873-to-$23,810
• B) $21,000-to-$31,500
• C) $24,000-to-$37,800
• D) $25,200-to-$37,800

---

Definitions:

Concentration Banking

Employing one bank to manage the balances in remote accounts. Balances are generally swept into the concentration bank daily.

Wire Transfers

Electronic transfers of funds across a network administered by banks or transfer service agencies globally.

Average Collection Period

The average number of days it takes a company to collect payments from its credit sales.

Credit Sale

A transaction where the payment for the purchased goods or services is deferred to a future date.