Recall the Application That Questions If the United States Can

question 1

Multiple Choice

Recall the Application that questions if the United States can or should adopt a value-added tax (VAT) to answer the following question(s) . The value-added tax is essentially a sales tax that is levied on each stage of production. Firms pay the value added tax on their sales and then receive a credit for value-added taxes paid by their suppliers. Unlike a sales tax, the value-added tax is embedded in the price of goods.
-According to this Application, some conservatives worry that a value-added tax ________ and some liberals worry that a value-added tax ________.

• A) will result in consumers not realizing all the taxes they pay; is regressive
• B) will discourage consumers from saving; will decrease federal tax revenue
• C) is progressive; will reduce investment.
• D) will penalize high-income individuals; will decrease per-capita GDP

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Definitions:

Credit Policy Relaxation

The act of making a company's criteria for extending credit more lenient, aiming to boost sales at the risk of higher bad debts.

Accounts Receivable

Unpaid dues from customers to a company for goods or services already delivered.

Zero Balance Accounts

A checking account in which a balance of zero is maintained by automatically transferring funds from a master account in an amount only large enough to cover checks presented.

Excess Funds

Surplus money available with an entity after all expenses and obligations have been met, which can be invested or saved for future use.