Because the income tax structure is progressive,the amount of taxes paid is a _____.
A)constant fraction of income throughout the business cycle
B)larger fraction of income in expansions than in contractions
C)smaller fraction of income in expansions than in contractions
D)decreasing function of income in both expansions and contractions
E)constant amount at all levels of output and income

Question

Quizplus · Accepted Answer

The income tax structure is progressive, meaning that the tax rate increases as income increases. Therefore, in expansions when incomes are generally higher, the amount of taxes paid will be a larger fraction of income compared to contractions when incomes are lower.

Because the Income Tax Structure Is Progressive,the Amount of Taxes