A progressive income tax is one where: MCQ with Answer and Explanation

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A progressive income tax is one where:

A. only the poor pay tax

B. the tax rate increases as income rises

C. the tax rate decreases as income rises

D. the tax rate is constant at all incomes

Answer: Option B

Solution (By JKSSB Mock Tests)

Under a progressive tax, the average tax rate rises as income increases.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'General Agreement on Trade in Services' came into force in which year?

A. 2005

B. 2000

C. 1994

D. 1995

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Correct Answer: Option D

Explanation:
GATS came into force in 1995 as part of WTO agreements.

This question belongs to: Economy GK Economy Set 1

Question #2

The concept of 'Dutch Disease' refers to:

A. The positive impact of resource discovery on all sectors

B. The negative impact of a natural resource boom on the manufacturing sector through currency appreciation

C. A disease affecting agricultural productivity

D. Only the impact of oil prices on inflation

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Correct Answer: Option B

Explanation:
Dutch Disease describes the phenomenon whereby a boom in the natural resource sector leads to real exchange rate appreciation, making the manufacturing and other tradable sectors less competitive.

This question belongs to: Economy GK Economy Set 1

Question #3

The term 'Fiscal Drag' refers to:

A. Automatic increase in tax revenue due to inflation

B. Decrease in tax rates

C. Increase in fiscal deficit

D. Deliberate reduction in government spending

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Correct Answer: Option A

Explanation:
Fiscal drag occurs when inflation pushes taxpayers into higher tax brackets, increasing tax revenue without any change in tax rates, acting as an automatic stabiliser.

This question belongs to: Economy GK Economy Set 1

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