If the tax rate on earnings exceeding Rs 30,000 rises from 30% to 40%, what is the marginal tax rate for an individual earning Rs 31,000?

Multiple choice question for Aggregate Supply, Unemployment And Inflation. Select an option, then review the explanation below.

Explanation

The marginal tax rate refers to the rate applied to the next unit of income earned. Since the income above Rs 30,000 is taxed at 40%, the marginal tax rate for someone earning Rs 31,000 is 40%.

Practice related questions from the same subject.

1.How would eliminating income tax likely affect the total employment and the natural rate of unemployment?
2.Which type of economic policies aim to decrease unemployment by weakening union influence, implementing tax reductions, lowering unemployment benefits, and providing investment incentives?
3.At any given real wage, the equilibrium unemployment rate is calculated as the difference between which two factors?
4.What type of unemployment affects an individual who loses their job due to a decline in an industry?
5.What factor can cause the short-run Phillips curve to shift position?

If the tax rate on earnings exceeding Rs 30,000 rises from 30% to 40%, what is the marginal tax rate for an individual earning Rs 31,000?

Explanation

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