9
practice testMultiple Choice

Practice Test

Question 9 • Personal Finance and Economics

Which best describes a regressive tax?

Answer
A
a tax that charges an equal percentage to all
B
a tax that charges low-income earners a lower percentage than high-income earners
C
a tax that charges earners based on their professions
D
a tax that charges high-income earners a lower percentage than low-income earners

Explanation

A regressive tax takes a larger share of income from people with lower incomes than from people with higher incomes. In other words, high-income earners pay a lower percentage of their income than low-income earners, which describes choice B.

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