Question

Study the graph, and then answer the question.

Marginal Tax Rate, Tax Paid, and Tax Share for Those with Incomes over $100,000 from 1920 to 1929


Which statement best describes the trends shown in the graph?
As the highest tax rate was reduced in the 1920s, the economy grew.
As the highest tax rate was reduced in the 1920s, the economy struggled.
As the highest tax rate was increased in the 1920s, the economy grew.
As the highest tax rate was increased in the 1920s, the economy struggled.

Answer 1

A) As the highest tax rate was reduced in the 1920s, the economy grew. (I just took the quiz)

Explanation: Because on the left axis the tax rate is decreasing while on the right the economy is growing.

Answer 2

A. As the highest tax rate was reduced in the 1920s, the economy grew.

Step-by-step explanation:

from the graph, it can be seen that decrease in tax rate consequently decrease in tax paid thereby increasing economy.

tax reduction helps to increase the economy growth by boosting bussiness demand by increasing firm after tax cash;

its increases workers take home pay thereby reducing unemployment and create a good standard of living for the people of the country.