A Tax Tends to

question 17

Multiple Choice

A tax tends to

• A) increase formal market activity because it decreases prices
• B) reduce formal market activity because it increases work incentives
• C) reduce formal market activity because it lowers the return on such activity
• D) reduce activity in the underground economy because people are afraid of being connected with tax fraud

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Definitions:

Cash Payments

Transactions where payment for goods or services is made in currency or via banknotes rather than by cheque, credit card, or other electronic means.

Tender Of Payment

Offering of money or payment as satisfaction of a debt or obligation.

Reject

To refuse to accept, submit to, believe, or make use of something.

Required Amount

The specific quantity of something needed or mandated by regulations or agreements.