1. An income tax is progressive if

Multiple Choice

• lower-income households pay a larger share of their income in taxes than higher-income households.

• higher-income households pay a larger share of their income in taxes than lower-income households.

• most of the tax revenue is used to benefit lower-income households.

• most of the tax revenue is used to benefit higher-income households.

2.

Among the reasons for high CEO pay are all of the following EXCEPT

Multiple Choice

• the people who are capable of doing the work required of a top corporate officer are relatively scarce.

• a corporate board might make the CEO job higher-paying in order to entice lower-level corporate officers to put forth maximum effort as they try to achieve the top position.

• paying CEOs with stock in the company will motivate the CEO to do what is in the best interests of the shareholders, and these stock packages might be very large to motivate more.

• shareholders might benefit from the prestige of investing in a company with a CEO who enjoys a high standard of living.

3.

As the wage rate rises, firms will respond by

Multiple Choice

• selling the same amount of output, but passing on the higher labor costs to the customer.

• selling more output to cover the additional costs of the labor force.

• hiring fewer workers because the labor demand curve slopes downward.

• hiring more workers because a higher wage rate will make workers work harder.

4.

A sales tax is usually considered to be a

Multiple Choice

• progressive tax.

• proportional tax.

• flat tax.

• regressive tax.

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Answer is 1 An income tax is progressive if Multiple Choice higherincome households pay a larger share of their income in taxes than lowerincome house... View the full answer