When Different Consumers Pay Different Amounts of Taxes, Ricardian Equivalence

question 49

Multiple Choice

When different consumers pay different amounts of taxes, Ricardian equivalence may fail because

• A)alternative ways of collecting the same tax revenue can have different welfare effects.
• B)consumers can become jealous of one another.
• C)such differences in taxes create welfare losses to the business community.
• D)such differences in taxes create credit market imperfections.
• E)higher taxes on more talented people may be politically popular.

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Definitions:

Syllogism

A form of deductive reasoning that consists of two premises followed by a conclusion, based on the relationship between the terms within the premises.

Shading

A technique used in drawing and painting to represent light and shadow, or the gradual change of value.

Universal Propositions

Statements that assert something about every member of a particular class.

Existential Import

The implication that something exists when affirmative statements are made about a category or class.