There Is a 50% Income Tax in a Society with Only

question 12

Multiple Choice

There is a 50% income tax in a society with only two individuals.Both individuals have pre-tax incomes of $50,000.In period 1,there is no tax deduction,and Harry gives $5,000 to charity while Sally gives $8,000 to charity.In period 2,the government makes charitable donations tax deductible and Harry gives $6,000 and Sally gives $12,000.The marginal impact of the tax break was ________; the inframarginal impact of the tax break was _________.

• A) $2,500; $13,000
• B) $2,500; $6,500
• C) $5,000; $13,000
• D) $5,000; $6,500

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Definitions:

Dissociation

A psychological process where there is a disconnection between thoughts, identity, consciousness, and memory, often occurring as a response to trauma.

Flashback

The sudden and intense re-experiencing of past memories or traumatic events, often a symptom of PTSD.

Hypervigilance

An enhanced state of sensory sensitivity accompanied by an exaggerated intensity of behaviors aimed at detecting threats.

Systematic Desensitization

A behavioral therapy method for reducing fear and anxiety responses by gradually exposing the patient to the feared object or context in a controlled way.