A Level Economics AQA Practice Exam

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Prepare for the A Level Economics AQA Exam with our interactive quiz. Test your knowledge with multiple choice questions and detailed explanations. Equip yourself with the tools needed for success!

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What impact does progressive taxation aim to have on economic inequality?

To increase overall tax revenue regardless of income
To reduce the tax burden on the wealthy
To redistribute wealth from higher income brackets to lower ones
To create a flat tax rate across all income levels

The correct answer is: To redistribute wealth from higher income brackets to lower ones

Progressive taxation is designed to address economic inequality by imposing higher tax rates on those with greater income levels. The main goal of this system is to redistribute wealth, meaning that individuals and households with higher income contributions help fund social programs and services that benefit those with lower incomes. This redistribution process aims to reduce the income gap between the rich and the poor, aiding in the provision of essential services such as healthcare, education, and social welfare for lower-income individuals. By taxing the wealthy at a higher rate, the government can allocate resources more equitably, which helps to improve the overall standard of living for the less affluent and contributes to a more balanced economic environment. In essence, progressive taxation functions as a tool for social equity, promoting a reduction in economic disparities.