Assuming that we can properly measure ability to pay, how do we use the principle of vertical equity to determine how much someone with greater ability to pay should pay in taxes?
a. By integrating it with the principle of horizontal equity.
b. Through reference to the benefit principle.
c. By looking at elasticities of demand for various income quintiles for the good in question.
d. We cannot use the principle of vertical equity to answer this question.
d
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Refer to the figure above, which shows domestic supply and demand. If P1 is equal to P2 (the world price) plus a tariff, then the social loss from the tariff is equal to
A) a + c B) b C) P1 ( Q3 - Q2 ) D) P2 [(Q2 - Q1 ) + (Q4 - Q3 )] E) a + b + c
The real exchange rate is
A) the price of one currency in terms of another. B) the price of domestic goods relative to foreign goods. C) the quantity of gold that can be purchased by one unit of currency. D) the difference in interest rates between two countries.
If a firm can double inputs and, thereby, more than double output over the range of output the market demands, it is a
a. natural monopoly b. local monopoly c. price discrimination monopoly d. monopsony e. candidate for antitrust prosecution
Country tends to grow faster when
a. Have more greater college graduates b. Less trade with the world c. Government restricts direction d. Savings and investments decreases e. Stock on physical capital