# 15. Suppose a small economy has two income tax rates: 15% for all income up to $50,000...

## Question:

Amy………………………………. $20,000

Betty……………………………… $40,000

Charlie……………………………. $60,000

Dimitry…………………………… $80,000

Evelyn…………………………….. $100,000

a. Calculate the total tax revenues paid by the five workers. What percent of total income does this represent?

b. Now assume that a recession causes each of the five salaries to fall by 25%. Given the lower salaries, what would be the total tax revenues paid by the five workers? What percent of total income does this represent?

c. Explain how this progressive tax structure acts as an automatic stabilizer.

Fantastic news! We've Found the answer you've been seeking!

## Step by Step Answer:

**Related Book For**