Economics · May / June 2024 · Paper 11 · Question 18

The table shows the income tax rate paid by workers at different levels of income in selected years for a developed economy. | income band ($) | tax rate year 1 (%) | tax rate year 2 (%) | |---|---|---| | 0 to 4999 | 0 | 0 | | 5000 to 9999 | 10 | 0 | | 10 000 to 19 999 | 20 | 10 | | 20 000 to 29 999 | 30 | 30 | | 30 000 to 49 999 | 40 | 50 | | 50 000+ | 40 | 60 | What is most likely to have been the economic objective of the government in changing the tax rates between year 1 and year 2?

1. Ato reduce a current account deficit
2. Bto reduce income inequality
3. Cto reduce inflation
4. Dto reduce structural unemployment

As printed in the paper