Determination of the Incidence of a Tax

question 104

Multiple Choice

Determination of the incidence of a tax:

• A)is not required when one is only interested in issues of equity
• B)is identical to the determination of legal liability for a tax
• C)requires one to evaluate where the tax burden eventually falls
• D)is solely determined by conditions of the 'flypaper theory' of taxation

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Definitions:

Lump-sum Payment

A lump-sum payment is a single payment made at a particular time, as opposed to multiple payments over time.

Indifferent

In finance, this refers to a state or condition where a particular choice does not make one better or worse off than another choice.

Interest Rate

The fee levied by a lender on a borrower for asset utilization, calculated as a percentage of the principal value.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.