Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 21, Problem 4MCQ
To determine
A lump-sum tax
Expert Solution & Answer
Answer to Problem 4MCQ
From the available options, the correct option is independent of income.
Explanation of Solution
A lump-sum tax is independent of income because this tax is based on constant value where income or revenue remains same at all levels of GDP. Therefore, this tax cannot increase or decrease as it cannot be lower or higher with the increase or decrease in income. And, it is not a type of business tax because it eliminates the burden of tax.
Therefore, options: a, b, d, and option e are incorrect.
Here, the correct option is c (independent of income).
Economics Concept Introduction
Introduction: A lump-sum tax would not increase or decrease with the change in quantity produced in the economy as it remains same at all levels of output.
Chapter 21 Solutions
Krugman's Economics For The Ap® Course
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