Explain the argument that consumption is the best tax base. Explain the argument that wealth is the best tax base. Explain the argument that income is the best tax base
In your opinion, which measure is the best tax base - consumption, income, or wealth? Why?
The argument that consumption is the best tax base rests on the notion that people should be taxed on what they take out of the common pot. Another argument is that a tax on consumption does not lead to double taxation of saving. The argument that wealth is the best tax base rests on the idea that an individual's command over resources comes from his or her accumulated wealth, not his or her yearly income. The argument that income is the best tax base is based on the argument that income is the best measure of an individual's capacity to command resources today. A tax on income would be a tax on the individual's ability to draw from the common pot. Answers to the last part will vary.
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When a country suffers from a speculative attack:
A. the supply of currency available shifts right. B. it forces the government to spend its reserves to defend its fixed exchange rate. C. it lowers the equilibrium exchange rate. D. All of these statements are true.
A negative externality exists when ______.
a. a situation occurs where an informed party benefits in an exchange by taking advantage of knowing more than the other party b. the available information is initially distributed in favor of one party relative to another in an exchange c. costs spill over to an outside party who is not involved in producing or consuming the good d. benefits spill over to an outside party who is not involved in producing or consuming the good
The M1 money supply is defined to be the sum of currency, traveler's checks, and:
A. checkable deposits. B. Treasury bonds. C. savings accounts. D. large time deposits.
When the firm increases output and the costs rise proportionately, then the long-run average cost curve is ________ and the firm is experiencing ________.
A. horizontal; constant returns to scale B. downward sloping; constant returns to scale C. upward sloping; diseconomies of scale D. downward sloping; economies of scale