Answer the following statement true (T) or false (F)
1) Sales taxes on consumer goods are regressive because poor people consume a larger
proportion of their incomes than do rich people.
2) A highly progressive tax takes relatively more from the rich than it does from the poor.
3) Given supply, the more inelastic the demand for a product, the larger the portion of an excise
tax that is shifted to consumers.
4) Given demand, the more inelastic the supply of a product, the larger the portion of an excise
tax that is borne by producers.
1) T
2) T
3) T
4) T
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Describe the temporary lending facilities that the Fed set up during the Financial Crisis of 2007-2009
What will be an ideal response?
Monetarists maintain that the increase in the money supply can explain the inflation of the 1970s and 1980s when one considers the bonds purchased by the Fed to finance the federal deficits of the period
Indicate whether the statement is true or false
The per capita real GDP in Sri Lanka is likely to be lower than the United States because Sri Lanka's economy is characterized by:
a. a more equitable income distribution system. b. a high population growth. c. a low regard for political freedom. d. a higher level of consumption spending. e. a high budget deficit.
Conventional budget accounting practices tend to overstate deficits in inflationary periods because they
a. ignore the inflation tax. b. confuse repayment of principal with real interest expenditures. c. double count some expenditures. d. understate real interest rates.