The Principle of Neutrality States That, All Else Equal

question 55

Multiple Choice

The principle of neutrality states that, all else equal

• A) taxes that are neutral with respect to economic decisions are generally preferable to taxes that distort economic decisions.
• B) taxes that distort economic decisions are generally preferable to taxes that are neutral with respect to economic decisions.
• C) taxes that are neutral with respect to economic decisions are equally preferable to taxes that distort economic decisions.
• D) in the long run, all taxes are essentially neutral with respect to economic decisions.

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Definitions:

Canadians

Individuals who are from or resident in Canada, a country in North America.

Discrepancy

A lack of compatibility or consistency between two or more facts, figures, or opinions, indicating a difference that may need to be reconciled.

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