Which is most likely to cause a more even distribution of income ?
Correct answer: C. An increase in progressive taxation
- A. An increase in indirect taxes
- B. An increase in managers salaries
- C. An increase in progressive taxation
- D. An increase in the rate of inflation
Explanation
Progressive taxation imposes higher tax rates on higher incomes, reducing post-tax income inequality. Indirect taxes can be regressive, while inflation does not reliably produce a more equal distribution.
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About Public Finance
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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