Question : What is the difference between a progressive tax and a regressive tax?
Option 1: A progressive tax is a tax that increases as income increases, while a regressive tax is a tax that decreases as income increases
Option 2: A progressive tax is a tax that decreases as income increases, while a regressive tax is a tax that increases as income increases
Option 3: A progressive tax is a tax that is based on the value of a good or service, while a regressive tax is a tax that is based on the quantity of a good or service
Option 4: A progressive tax is a tax that is based on the quantity of a good or service, while a regressive tax is a tax that is based on the value of a good or service
Correct Answer: A progressive tax is a tax that increases as income increases, while a regressive tax is a tax that decreases as income increases
Solution : The correct answer is (a) A progressive tax is a tax that increases as income increases, while a regressive tax is a tax that decreases as income increases.
In a progressive tax system, the tax rate increases as a taxpayer's income rises. This means that individuals with higher incomes pay a higher percentage of their income in taxes compared to those with lower incomes. The purpose of a progressive tax system is to distribute the tax burden more equitably, with higher-income individuals contributing a larger proportion of their income.
In contrast, a regressive tax system is one where the tax burden decreases as income increases. This means that individuals with lower incomes pay a higher percentage of their income in taxes compared to those with higher incomes. In a regressive tax system, the tax rate tends to be higher for low-income individuals or for certain goods or services that are consumed disproportionately by lower-income households.
Option 1: A progressive tax is higher for higher income earners, while a regressive tax is higher for lower income earners
Option 2: A progressive tax is higher for lower income earners, while a regressive tax is higher for higher income earners
Option 3: A progressive tax is a direct tax, while a regressive tax is an indirect tax
Option 4: A progressive tax is a tax on goods and services, while a regressive tax is a tax on income
Question : What is the difference between a direct tax and an indirect tax?
Option 1: A direct tax is a tax on goods and services, while an indirect tax is a tax on income
Option 2: A direct tax is a tax on income, while an indirect tax is a tax on goods and services
Option 3: A direct tax is a progressive tax, while an indirect tax is a regressive tax
Option 4: A direct tax is a regressive tax, while an indirect tax is a progressive tax
Question : The rate of tax increase as the amount of the tax base increases is called
Option 1: proportional tax
Option 2: progressive tax
Option 3: regressive tax
Option 4: degressive tax
Question : The law of demand states that:
Option 1: if the price of a good increases, the demand for that good decreases
Option 2: if the price of a good increases, the demand for that good increases
Option 3: if the price of a good increases, the quantity demanded of that good decreases
Option 4: if the price of a good increases, the quantity demanded of that good increases
Question : Redistribution of income in a country can be brought about through
Option 1: progressive taxation combined with progressive expenditure
Option 2: progressive taxation combined with regressive expenditure
Option 3: regressive taxation combined with regressive expenditure
Option 4: regressive taxation combined with progressive expenditure
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