What Does It Mean When a Tax Code Is Convex

question 7

Multiple Choice

What does it mean when a tax code is convex?

• A) It is a flat tax and does not vary as taxable income varies.
• B) It is regressive and taxes lower incomes more.
• C) Is proportional and the rate always taxes at proportional income equivalents.
• D) It imposes a higher rate on higher incomes and a lower rate on lower incomes.

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Definitions:

Confidence Level

The probability, expressed as a percentage, that a parameter lies within a specified range of values (confidence interval).

Confidence Interval

A range of values, derived from the sample data, within which the true population parameter is expected to lie, with a given level of confidence.

Standard Error

The statistical term that measures the accuracy with which a sample represents a population.

Mean

The arithmetic average of a set of numbers, calculated by adding them up and dividing by the count of numbers.