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Economics (AS & A Level) · May / June 2022 · Paper 14 · Question 18

9708Fiscal policy

A government introduces taxes on company profits. A 5% tax rate is levied on all profits up to the first $10 000 and a 10% rate is levied on all profits above $10 000. How would these taxes be described?

  1. Aup to $10 000: progressive; above $10 000: progressive
  2. Bup to $10 000: progressive; above $10 000: proportional
  3. Cup to $10 000: proportional; above $10 000: progressive
  4. Dup to $10 000: proportional; above $10 000: proportional

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Correct answer: D. up to $10 000: proportional; above $10 000: proportional

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