Which of the Following Is an Advantage of a Value

question 25

Multiple Choice

Which of the following is an advantage of a value added tax (VAT) compared to a final tax on retail sales?

• A) The VAT may lead to higher revenue collected because even if no sales takes place, the government collects tax revenue at earlier stages of production.
• B) The VAT is a more equitable tax system because the tax burden is shared by every participant in the production process and by the final consumer.
• C) The VAT encourages productive behavior because each producer bears a smaller portion of the total tax imposed on a product.
• D) The VAT reduces a nation's trade deficit.

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Definitions:

Gallons

A unit of volume measurement used primarily in the United States to measure liquids.

Miles

A unit of length equal to 5,280 feet or approximately 1,609 meters, used primarily in the United States and the UK for measuring distances.

Gallon

A unit of volume for liquid measure equal to four quarts, used in both the US customary and British imperial systems.

Gasoline

A volatile, flammable liquid derived from petroleum, commonly used as fuel for engines.