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Taxation and Government Finance Quiz

#1

Which of the following is not a direct tax?

Sales tax
Explanation

Sales tax is an indirect tax levied on consumption.

#2

Which of the following is a regressive tax?

Sales tax
Explanation

Sales tax takes a higher proportion of income from low-income earners.

#3

What is the Laffer curve used to illustrate?

The relationship between tax rates and tax revenue
Explanation

It shows that there's an optimal tax rate for maximizing revenue.

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