Which of the Following Statements Is True

question 83

Multiple Choice

Which of the following statements is true?

• A) Economists believe that average tax rates have a greater influence on behavior than marginal tax rates.
• B) Economists believe that marginal tax rates have a greater influence on behavior than average tax rates.
• C) Economists believe that marginal and average tax rates influence behavior to the same extent.
• D) Economists believe that neither marginal nor average tax rates have any influence on behavior.

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Definitions:

Market System

(1) An economic system in which individuals own most economic resources and in which markets and prices serve as the dominant coordinating mechanism used to allocate those resources; capitalism. Compare with command system. (2) All the product and resource markets of a market economy and the relationships among them.

Incentives

Rewards or penalties designed to influence the actions or behaviors of individuals or entities in desired ways.

Internal Efficiency

The effective allocation and use of resources within an organization or system, leading to the achievement of its objectives without waste.

Public Sector

The segment of the economy comprised of government services and enterprises, funded and operated by the government, serving the public interest.