Figure 6-17 -Refer to Figure 6-17.How Is the Burden of the Tax

question 496

Multiple Choice

Figure 6-17

-Refer to Figure 6-17.How is the burden of the tax shared between buyers and sellers? Buyers bear

• A) three-fourths of the burden, and sellers bear one-fourth of the burden.
• B) two-thirds of the burden, and sellers bear one-third of the burden.
• C) one-half of the burden, and sellers bear one-half of the burden.
• D) one-fourth of the burden, and sellers bear three-fourths of the burden.

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Definitions:

Zero Coupon Bond

A bond that does not pay periodic interest but is issued at a discount from its face value and matures at that face value, effectively creating a fixed rate of return.

Equity

The value of an ownership interest in a company, represented by the share of assets after all liabilities have been deducted.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, used as a means for governments to borrow money.