The average tax rate is ?
Correct answer: A. total taxes paid divided by total income
- A. total taxes paid divided by total income
- B. the extra taxes paid on an additional dollar or income.
- C. the taxes paid by the marginal worker
- D. total income divided by total taxes paid
Explanation
The average tax rate measures the overall share of income paid in tax, calculated as total taxes divided by total income. The extra tax on one additional dollar is instead the marginal tax rate.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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