Chapter 16, Problem 9AA

To determine

To choose: The term that best completes the given sentence.

Explanation of Solution

Hence, when the economy is low, the Federal Reserve seeks to raise consumer and business demand by lowering interest rates or buying securities from financial institutions. On its part, Congress will raise demand by raising spending and lowering taxes. Tax cuts are rising the demand of households by increasing the wages for taking-home staff.

The three major source of federal tax revenue are payroll taxes, corporate income tax and personal income taxes. Land tax, excise duty and other charges and taxes are some other source of tax revenue. So, the correct option is ‘g. major’.

Economics Concept Introduction

Introduction: The federal income tax is based on a progressive tax structure, which taxes higher income earners at a higher rate. The tax rate applicable to each person is set in a marginal tax bracket that reflects the highest tax rate levied on earned income.