Refer to the data. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the tax system:

Answer the question on the basis of the following before-tax consumption schedule for a closed economy:

A.  is regressive.
B.  is proportional.
C.  is progressive.
D.  may be either proportional or progressive.

ANSWER:

A.  is regressive.