The Sales Tax Laws of Many States Exempt the Purchase

question 6

Multiple Choice

The sales tax laws of many states exempt the purchase of groceries and prescription drugs from tax. Such exemptions are intended to improve the:

• A) Convenience of the tax
• B) Equity of the tax
• C) Sufficiency of the tax
• D) Neutrality of the tax

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Definitions:

Cyclical Unemployment

Unemployment caused by fluctuations in the economic cycle, such as expansions and recessions, often related to changes in demand.

Real Rate

The real rate is the interest rate adjusted for inflation, reflecting the true cost of borrowing or the real yield on an investment.

Nominal Rate

The stated interest rate of an investment or loan, without adjustment for inflation or other factors that affect the real rate of return.

Rate Of Inflation

The percentage increase in the general level of prices for goods and services in an economy over a period of time.