Taxes Create Deadweight Losses Because They

question 254

Multiple Choice

Taxes create deadweight losses because they

• A) reduce profits of firms.
• B) distort incentives.
• C) cause prices to rise.
• D) create revenue for the government.

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Definitions:

Trial Balance

A statement that lists all the balances of the general ledger accounts of a business at a particular time to check the correctness of double-entry bookkeeping.

Ledger Balance

The total balance of all accounts in a ledger at a particular point in time, reflecting the current financial position.

Trial Balance

An accounting table that consolidates all ledger balances into equivalent columns for debit and credit accounts.

T Accounts

T accounts are a visual representation used in accounting to depict ledgers, showing debits on the left and credits on the right.