Taxes Create Deadweight Loss When They

question 84

Multiple Choice

Taxes create deadweight loss when they

• A)distort behavior.
• B)cause the price of the product to increase.
• C)don't raise sufficient government revenue.
• D)cannot be computed easily.

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Definitions:

Disposable Income

Income remaining for a person to spend or save after all taxes have been paid.

Disposable Income

The amount of money that households have available for spending and saving after income taxes have been taken out.

Consumption Spending

Expenditures by households on goods and services, excluding purchases of new housing, and a major component of GDP.

Consumption Function

A representation in economics indicating the relationship between total consumer expenditures and household income levels.