Practice mode / Income Inequality What is the marginal tax rate? A Option A: The additional tax you pay divided by your total income B Option B: The tax rate you pay on any additional income that you earn C Option C: Your total income divided by the total amount of tax you pay D Option D: The total amount of tax you pay divided by your total income Correct answer B. The tax rate you pay on any additional income that you earn Explanation The marginal rate applies to the next pound earned and shapes incentives to work more. Total tax divided by total income is instead the average tax rate. Show answer Report a problem Answer checked 11 October 2026 · How we write and check questions
Question 01 / Income Inequality Under a progressive income tax, how much do people with higher incomes pay? A Option A: A higher percentage of their income in taxes than low-income people B Option B: The same percentage of their income in taxes as low-income people C Option C: All the taxes in the economy D Option D: A lower percentage of their income in taxes than low-income people Correct answer A. A higher percentage of their income in taxes than low-income people Show answer Open question
Question 02 / Income Inequality What is meant by tax incidence? A Option A: The behaviour of shifting the tax to another party B Option B: The ultimate distribution of a tax's burden C Option C: A measure of the impact the tax has on employment and output D Option D: The structure of the tax Correct answer B. The ultimate distribution of a tax's burden Show answer Open question
Question 03 / Income Inequality Where a tax can be shifted, what determines its incidence? A Option A: Who is legally obliged to pay the tax B Option B: Elasticities of demand and supply C Option C: Whether there is perfect or imperfect information D Option D: How many producers there are Correct answer B. Elasticities of demand and supply Show answer Open question
Question 04 / Income Inequality What kind of tax is VAT a good example of? A Option A: Direct B Option B: Excise duty C Option C: Specific D Option D: Ad valorem Correct answer D. Ad valorem Show answer Open question
Discussion