Taxes Distort Economic Behaviour Because

question 63

Multiple Choice

Taxes distort economic behaviour because

• A)they change the composition of income and spending.
• B)they cause deviations in economic behaviour from the efficient,free-market outcome.
• C)they change the balance between private and public expenditures.
• D)they change the composition of consumption,investment,government spending,and net exports.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics to quantify the variability or spread of a data set.

SML

The Security Market Line (SML) is a graphical representation of the Capital Asset Pricing Model (CAPM), showing the relationship between the expected return of investments and their risk as measured by beta.

Stable Equilibrium

A condition in which a system tends to return to its original state after a disturbance, indicating stability and balance.

Probabilities Of Loss

Probabilities of loss indicate the likelihood or risk of an investment resulting in a financial loss rather than a gain or profit.