Define Vertical Equity and Horizontal Equity

question 75

Essay

Define vertical equity and horizontal equity.How do tax loopholes sometimes create vertical and horizontal inequity?

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Definitions:

Capital Adequacy Ratio

A measure used by banks to ensure they have enough capital to cover their risks and continue operating in case of losses.

Banking Regulations

Rules and guidelines set by authorities that govern the operations, standards, and procedures of banks and financial institutions.

Noncompliance

Refers to the failure to act according to set rules, standards, or laws.

Accounting-Based Incentives

Accounting-Based Incentives are rewards given to managers or employees based on reaching specific financial performance targets.