Suppose the tax amount on the first $10,000 income is $0; $2000 on the next $20,000; $4000 on the next $20,000; $6000 on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $30,000 and Family B has income of $80,000. What
is the marginal and average tax rate for each family?
A) Family A: marginal—10 percent; average—6.7 percent; Family B: marginal—30 percent; average—15 percent.
B) Family A: marginal—10 percent; average—20 percent; Family B: marginal—30 percent; average—23 percent.
C) Family A: marginal—10 percent; average—10 percent; Family B: marginal—40 percent; average—40 percent.
D) Family A: marginal—10 percent; average—15 percent; Family B: marginal—40 percent; average—20 percent.
Answer: A
You might also like to view...
Everything else equal, an appreciation of the dollar will:
A) cause the net exports of the U.S. to increase. B) cause the U.S. GDP to fall. C) not affect U.S. GDP. D) cause the U.S. GDP to increase.
The maximum potential money multiplier is equal to
A) one minus the reserve ratio B) the reserve ratio. C) the inverse of the required reserve ratio. D) the number of dollars on reserve.