Consider a System in Which a Person Earning $10,000 Pays

question 4

Multiple Choice

Consider a system in which a person earning $10,000 pays $1,000 in taxes, a person earning $25,000 pays $2,000, and someone earning $60,000 pays $4,000. This is an example of _____

• A) progressive taxation.
• B) proportional taxation.
• C) regressive taxation.
• D) a property tax.
• E) a tax based on the benefits-received principle.

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Definitions:

Recessions

Periods of temporary economic decline during which trade and industrial activity are reduced, typically identified by a fall in GDP in two successive quarters.

Keynes

Pertains to John Maynard Keynes, an English economist whose theories revolutionized macroeconomic practice and government economic strategies.

Aggregate Supply

The nation’s total output of goods and services.

Depression

A severe and prolonged downturn in economic activity, characterized by significant decline in GDP, high unemployment, and deflation.