What is the flypaper theory of tax incidence? This theory is typically wrong. Why?
This is an axiom which maintains that the burden of any tax sticks where the government puts it. This theory is wrong because when people change their behavior on account of a tax, they often shift the burden of the tax onto someone else. Failure to grasp this basic point has led to all sorts of misguided tax legislation in which members of Congress or state legislatures, thinking they were placing a tax burden on one group of people, inadvertently placed it squarely on another.
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Other things remaining same, a right shift in the demand curve will lead to:
A) a decrease in the equilibrium price and the equilibrium quantity. B) a decrease in the equilibrium price and an increase in the equilibrium quantity. C) an increase in the equilibrium price and the equilibrium quantity. D) an increase in the equilibrium price and a decrease in the equilibrium quantity.
When a rent ceiling law is passed in a city, which of the following occurs?
A) The total price of renting an apartment decreases to all renters. B) The quantity of apartments supplied does not change. C) Some landlords and renters use methods such as "key money" to get around the rent ceiling law. D) Renters have no trouble finding a nice, reasonably priced apartment to rent. E) Generally the number of renters in the city increases because people move to the city to take advantage of the low-rent apartments.
Comparison of the European and U.S. labor markets suggests that
A) it is relatively cheap to hire workers in the United States. B) the U.S. labor market is more "flexible" than the European labor market. C) job security and income equality are greater in the European labor market. D) A and B. E) all of the above.
Unlike recent events in England, the United States has no recent history of bank failures.
Answer the following statement true (T) or false (F)