Suppose that Algeria has a workforce of 9,416,534, each of whom earns an average annual salary of (equivalent US dollars) $6,844. If the Algerian government wishes to raise $9 billion in tax revenue, approximately where should it set the income tax rate?

First estimate the workforce’s total annual income: 9,416,534 × $6,844 ≈ $64.45 billion. To raise $9 billion, the tax rate would need to be $9 billion ÷ $64.45 billion ≈ 0.14, or 14%. So the correct choice is 14%.

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