23
QuizMultiple Choice

Financial Literacy — Test

Question 23 • Economics

What effect would a tax increase have on income?

Answer
A
It would reduce gross income.
B
It would not affect gross income.
C
It would increase net income.
D
It would not affect net income.

Explanation

Gross income is income before taxes are taken out, so a tax increase does not change gross income. Net income is what remains after taxes, so it would decrease; that is why “It would not affect gross income” is correct.

AI-written and checked against the verified answer.

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