Tax rates are so fixed that in the upward phase of the business cycle with the increase in national…
Built-in flexibility makes tax receipts respond automatically to changes in national income without a new rate decision. A progressive tax schedule can make receipts rise…
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Tax rates are so fixed that in the upward phase of the business cycle with the increase in national income the tax yield would automatically go up at a faster rate than the increase in national income without any changes in the tax rates. This device is technically known as :
Answer and explanation
Correct answer B
Built-in flexibility makes tax receipts respond automatically to changes in national income without a new rate decision. A progressive tax schedule can make receipts rise faster than income.
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RPSC Assistant Professor (College Education)