A Tax System with Little Deadweight Loss and a Small

question 173

Multiple Choice

A tax system with little deadweight loss and a small administrative burden would be described as

• A)efficient.
• B)equitable.
• C)communistic.
• D)capitalistic.

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Definitions:

Saving

Saving refers to the portion of income not spent on current expenses and set aside for future use, often placed in accounts or investments that can accumulate interest over time.

Induced Consumption

The portion of consumption that changes as a result of changes in income, with higher incomes leading to increased consumption.

Autonomous Consumption

The amount of consumption that occurs regardless of current income levels, reflecting basic spending needed to survive.

Saving

The portion of income not spent on consumption but kept aside for future use, which may be invested to generate wealth.