Which of the Following Statements Is Not Correct

question 505

Multiple Choice

Which of the following statements is not correct?

• A)A gasoline tax can be an example of a tax that uses the benefits principle.
• B)A progressive tax attempts to achieve vertical equity.
• C)A progressive tax can be an example of the ability-to-pay principle.
• D)A regressive tax attempts to achieve vertical equity.

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Definitions:

Loanable Funds

The money available for borrowing in the financial markets, often coming from savings and influenced by interest rates.

Real Rate of Interest

The interest rate adjusted for inflation, reflecting the true cost of borrowing money and the real yield for savers.

Nominal Rate of Interest

The stated interest rate of a bond or loan without adjusting for inflation, representing the actual percentage that borrowers pay to lenders.

Inflation Rate

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