UNMER ECONOMICS Exam 2- Continued 57. Using Student Number complete sentences. g
ID: 1225891 • Letter: U
Question
UNMER ECONOMICS Exam 2- Continued 57. Using Student Number complete sentences. give an example for each of the following to show how the has regulated economic activity to (A) Protect the environment (B) Protect consumers (C) Protect workers 58. There are three parts to this question. Answer each part in the space provided. (A) Sandy and Barbara both work for the same company, a secretary and makes $25,000 a year. Barbara is a research analyst and makes S50 000 a year. Sandy in the 15% tax bracket while Barbara is in the 28% bracket. Is this tax proportional. progressive, or regressive? (B) Lf both Sandy and Barbara were taxed at the same rate, is this tax proportional, progressive, or regressive? (C Sandy and Barbara both spend S300 per month on food. Both pay the same sales tax at the grocery store. Because this sales tax takes a larger percentage of Sandy's income, is it considered to effectively be proportional, progressive, or regressive? (overExplanation / Answer
58. (A) Progressive tax is a tax which increases with increase in the income of the person. In this case, person with higher income has to pay higher tax as compared to the other with lower income. So, this represents progressive tax.
(B) A proportionate tax is a tax imposed so that tax rate is fixed whether taxable income of person increases or decreases. So, in the given scenario, both Sandy and Barbara have to pay same percentage of tax. Therefore, this is proportionate tax.
(C) It shows regressive tax. Under regressive tax, person with lower income pays more tax as compared to rich people. In this case, sales tax take more proportion of Sandy's income it means that income of Sandy is less than the income of barbara.
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