Which of the following is TRUE of an excise tax?
A. An excise tax is levied on purchases of particular good or service.
B. Imposing an excise tax shifts the market demand curve.
C. An excise tax is always a unit tax.
D. An excise tax is based on an individual's income.
Answer: A
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A standardized good or service is one:
A. for which any two units of it have the same features and are interchangeable. B. for which any two units of it have similar features that could be considered close substitutes. C. for which any two units of it have different, unique features. D. that has very distinguishable characteristics, with each unit being economically unique.
Governments may attempt to protect dairy farmers from low milk prices by:
A. banning the hoarding of milk by households. B. setting a minimum price on milk. C. increasing taxes on dairy farmers. D. reducing subsidies on the price of milk.
The aggregate demand curve is downward sloping because
a. an increase in the price level will cause an increase in spending on goods and services. b. at lower price levels, real wealth decreases, causing a decrease in the quantity demanded of goods and services. c. at lower price levels, interest rates increase, causing a decrease in the quantity demanded of goods and services. d. at lower price levels, net exports increase, causing an increase in quantity demanded of goods and services.
When two goods are perfect substitutes, the
a. indifference curve is a downward-sloping straight line. b. marginal rate of substitution is constant. c. indifference curve is a vertical straight line. d. Both a and b are correct.