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

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Definitions:

Fuel

A material that is used to produce energy, especially by combustion, to generate power or as a source of heat.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of goods or services produced, such as rent, salaries, and insurance.

Cakes

Commonly a sweet baked dessert, typically made from ingredients like flour, sugar, eggs, and butter or oil.

Wheat

A cereal grain that is a worldwide staple food, used for making products like bread, pasta, and pastry due to its gluten content.