ECONOMICS
MARKET FAILURES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Taxes designed to reduce external costs.
|
|
|
A tax designed to induce private decision makers to take account of the social costs that arise from a negative externality.
|
|
|
A tax in which the average tax rate increases with income.
|
|
|
A tax in which the average tax rate decreases as income increases.
|
|
|
A tax in which the average rate of tax is constant regardless of income level.
|
Detailed explanation-1: -Definition: Under this system of taxation, the tax rate diminishes as the taxable amount increases. In other words, there is an inverse relationship between the tax rate and taxable income. The rate of taxation decreases as the income of taxpayers increases.
Detailed explanation-2: -Regressive taxation is a type of taxation by the government in which a larger percentage of the income is taxed from the low income groups than the higher income groups. In regressive taxation, the taxes are uniform irrespective of the income of the tax payers. i.e the same taxes apply to all income groups.
Detailed explanation-3: -regressive tax, tax that imposes a smaller burden (relative to resources) on those who are wealthier. Its opposite, a progressive tax, imposes a larger burden on the wealthy. A change to any tax code that renders it less progressive is also referred to as regressive.
Detailed explanation-4: -The correct option is B Regressive taxation system.
Detailed explanation-5: -Applying uniform tax on a large percentage of low income earners than on high income earners is known as regressive tax. Regressive tax imposes more burden on the poor than on the rich. The tax burden on people having more ability to pay gets reduced.