The 2010 U.S. Federal Personal Income six tax brackets range from 10 percent for individuals earning less than 8,025 to 35 percent for those earning over 357,700 whereas the Lithuanian tax rate for all citizens' income is 24 percent.
The Lithuanian income tax system is a ________ tax and the U.S. income tax system is a ________ tax. A) progressive; proportional
B) regressive; progressive
C) proportional; regressive
D) proportional; progressive
Question 2
During October and November 2008, gasoline prices were falling dramatically making travel by car less expensive but air travel prices were as high as ever.
If travel by car is less expensive, and income remains the same, describe the substitution and income effects that occur for travelling by car. A) If travelling by car is a normal good, the substitution effect would cause an increase and the income effect would cause a decrease in travelling by car.
B) If travelling by car is a normal good, both the substitution and income effects would be cause an increase in travelling by car.
C) If travelling by car is a normal good, the substitution effect would cause a decrease and the income effect would cause an increase in travelling by car.
D) If travelling by car is a normal good, both the substitution and income effects would cause a decrease in travelling by car.
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