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JAMB Economics 2010 Question 27

Question 27

Public Finance

In national income accounting, tax is determined by the

  1. A.level of income
  2. B.level of consumption
  3. C.level of investment
  4. D.rate of savings.
Show the answer and explanation

Answer: A (level of income)

Explanation

In the income model, tax revenue depends on income: the higher the national income, the more tax is collected.