Answer the Question on the Basis of the Following Before-Tax

question 126

Multiple Choice

Answer the question on the basis of the following before-tax consumption schedule for a closed economy: $\begin{array}{l}\text { Gross Domestic }\\\underline{\text { Product (GDP) } } & \underline{\text { Consumption (C) }} \\\$0 & \$ 40 \\100 & 120 \\200 & 200 \\300 & 280 \\400 & 360\end{array}$ Refer to the data.If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy,the tax system:

• A) is regressive.
• B) is proportional.
• C) is progressive.
• D) may be either proportional or progressive.

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Definitions:

Willingness to Buy

The extent to which a consumer is ready to purchase a product or service, based on factors like price, quality, and personal preference.

Consumers

Individuals or groups that purchase or have the potential to purchase goods and services for personal use.

Primary Data

Information that is collected firsthand for a specific research purpose or project, such as through surveys, interviews, or experiments.

Watching People

The act of observing individuals' behaviors and interactions, often used in market research or social studies to gather insights.