The ability-to-pay principle is most closely tied to the concept of
A. horizontal equity in taxation.
B. fiscal federalism.
C. vertical equity in taxation.
D. the benefits principle of tax equity.
Answer: C
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The concept of Pareto optimality is a
A) utopian concept. B) useful concept because it guarantees economic equality. C) useful concept because it defines economic efficiency. D) useful concept that carefully balances a society's desires for equality and efficiency.
Which economic concept is the closest to the saying "There's no free lunch"?
a. Specialization b. Unlimited wants c. Underutilization of resources d. Opportunity costs e. Overutilization of resources
If the Fed wants to lower the interest rate, it will
a. buy bonds and decrease the money supply. b. buy bonds and increase the money supply. c. sell bonds and decrease the money supply. d. sell bonds and increase the money supply. e. sell bonds and decrease money demand.
Which of the following is subject to double taxation?
A) income earned by people in the lowest tax bracket B) Social Security income C) dividends and retained earnings D) income earned by government employees