What Is a Value-Added Tax (VAT)

question 92

Multiple Choice

What is a value-added tax (VAT) ?

• A) It is essentially a tax on profits earned by firms from the sale of goods and services.
• B) It is a tax placed on a product whenever value is added at a stage of production and at final sale.
• C) It is a tax imposed on those who supply factors of production, such as the payroll tax.
• D) It is a tax imposed on luxury goods to generate additional revenue for the government.

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Definitions:

Return Requirement

A specified rate of return that investors expect to receive from an investment.

Over-Valued

A term describing an asset or security whose price is considered higher than its underlying value or fundamentals justify.

Compounded Continuously

The process of calculating interest on an investment or loan in such a way that the interest itself earns interest, occurring an infinite number of times per period.

Instantaneous

Occurring or done in an instant or immediately.