Induced Taxes and Needs- Tested Spending the Size of the Government

question 270

Multiple Choice

Induced taxes and needs- tested spending the size of the government expenditure multiplier.

• A) increases; increases
• B) decreases; increases
• C) increases; decreases
• D) decreases; decreases

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Definitions:

Tax Shifting

Occurs when households can alter their behavior and do something to avoid paying a tax.

Avoid Paying

Strategies or actions taken to minimize or evade expenses, taxes, or other financial obligations.

Luxury Tax

A tax imposed on expensive goods and services, often considered non-essential, as a means of raising government revenues without placing the burden on essential items.

Tax Incidence

The distribution of the economic burden of a tax between buyers and sellers, depending on the elasticity of demand and supply.