Distorting Taxes Can Invalidate Ricardian Equivalence Because

question 45

Multiple Choice

Distorting taxes can invalidate Ricardian equivalence because

• A)the distortions are only faced by the business sector.
• B)they are inferior to lump-sum taxes.
• C)they confuse consumers about the need for government to repay its debt.
• D)they are more popular, politically, than lump-sum taxes.
• E)alternative ways of collecting the same tax revenue produce different amounts of lost welfare.

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