Author Question: In a proportional income tax system A) marginal tax rates are the same regardless of the level of ... (Read 65 times)

fasfsadfdsfa · **on:** Jun 29, 2018

In a proportional income tax system

A) marginal tax rates are the same regardless of the level of taxable income.
B) marginal tax rates increase as the level of taxable income increases.
C) marginal tax rates decline as the level of taxable income declines.
D) everyone pays the same dollar amount in taxes.

Question 2

Sara looks into her closet and discovers a pair of like-new shoes she no longer wears because they give her blisters. From the economist's perspective, was Sara behaving rationally when she bought those shoes?

A) No. If any of a person's decisions have poor results, that person is irrational.
B) Yes, as long as Sara didn't intentionally purchase blister-causing shoes.
C) No. The rationality assumption states that rational people never make mistakes.
D) It's not clear because psychology, not economics, deals with the rationality assumption.