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WAEC Economics 2011 Question 36

Question 36

Public Finance

A tax is regressive if the

  1. A.rate of tax is constant at all income levels.
  2. B.rate of tax decreases as income increases.
  3. C.rate of tax increases as income increases.
  4. D.tax is direct rather than indirect.
Show the answer and explanation

Answer: B (rate of tax decreases as income increases.)

Explanation

A regressive tax takes a smaller percentage as income rises.