Tax Smoothing Is a Desirable Policy Because It

question 3

Multiple Choice

Tax smoothing is a desirable policy because it:

• A) reduces the distortions of incentives caused by taxes.
• B) reduces budget deficits in periods of recession.
• C) eliminates the impact of automatic stabilizers.
• D) is consistent with a balanced budget.

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Definitions:

Covariation Principle

A principle in social psychology that asserts that for someone to attribute an effect to a condition, they must observe that the effect covaries with the condition across time.

Dispositional Attribution

The tendency to attribute someone's behavior to their personality, character, or disposition rather than situational factors.

Smart

Characterized by quick intelligence or cleverness.

Luck Of The Draw

An expression denoting the outcome of a situation determined purely by chance.