A regressive tax is one where: MCQ with Answer and Explanation

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A regressive tax is one where:

A. the tax burden falls more heavily on lower income groups

B. the tax rate rises as income rises

C. the tax rate is constant

D. there is no tax on income

Answer: Option A

Solution (By JKSSB Mock Tests)

A regressive tax takes a larger percentage of income from low-income earners.

This question belongs to: Economy GK Economy Set 1

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Question #1

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In the context of production, the law of variable proportions is also known as:

A. Law of diminishing returns

B. Law of constant returns

C. Law of increasing returns

D. Law of returns to scale

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Correct Answer: Option A

Explanation:
The law of variable proportions (or law of diminishing returns) states that as more units of a variable factor are applied to a fixed factor, after a point, the marginal product of the variable factor diminishes.

This question belongs to: Economy GK Economy Set 1

Question #2

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The concept of 'Tobin's q' is defined as:

A. The ratio of consumption to income

B. The ratio of investment to saving

C. The ratio of money supply to GDP

D. The ratio of the market value of installed capital to its replacement cost

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Correct Answer: Option D

Explanation:
Tobin's q is the ratio of the market value of a firm's capital to the replacement cost of that capital. Investment is encouraged when q > 1 and discouraged when q < 1.

This question belongs to: Economy GK Economy Set 1