What is the ability-to-pay principle of taxation? List one strength and one weakness of the ability-to-pay principle as a guide to tax policy
What will be an ideal response?
The ability to pay principle states that individuals should pay taxes in proportion to their ability to pay. A major strength of the ability-to-pay principle is that it is a useful guide when the benefit principle is inapplicable, such as when it is impossible to determine the distribution of benefits from a government program. A weakness of the ability-to-pay principle is that it is often difficult to determine an individual's ability to pay, making it difficult to apply in the real world.
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When the prisoners follow their dominant strategy and confess, they will be worse off than if both had remained silent—hence, the "prisoners' dilemma."
a. True b. False Indicate whether the statement is true or false
The "standard of deferred value" function of money means it is:
a. Unit in terms of which everything is valued and the basis for establishing relative prices between goods and services. b. Asset people can use to accumulate wealth. c. Barter value of a product for which a nation has a comparative advantage. d. Asset individuals get for goods and services and then use later to purchase other goods and services. e. The unit in terms of which people write contracts.
Imposing a unit excise tax on the final sale of a good or service can be displayed graphically as
A) a vertical shift upward of the demand curve. B) a vertical shift upward of the supply curve. C) a vertical shift downward of the demand curve. D) a vertical shift downward of the supply curve.
The WTO and GATT promote trade by:
A. reducing tariffs. B. eliminating quotas. C. reducing agricultural subsidies. D. All of these.