Which of the Following Statements About a Consumption Tax Is

question 70

Multiple Choice

Which of the following statements about a consumption tax is false?

• A)Compared to an income tax, a consumption tax would necessarily produce lower revenues for the government in a given year because the portion of income saved is not taxed.
• B)A consumption tax encourages saving, which when invested could lead to increased economic activity.
• C)Under a consumption tax, current consumption is taxed at a lower rate than future consumption.
• D)A consumption tax could favour high-income individuals who are likely to save more than low-income individuals.

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Definitions:

Alcohol Consumption

Alcohol consumption refers to the drinking of alcoholic beverages and can range from light use to heavy drinking or alcohol dependence.

Representative Sample

A subset of a population that accurately reflects the characteristics of the larger group from which it is drawn.

Volunteer Bias

A bias in research outcomes that occurs due to differences between those who choose to participate in studies and those who do not.

Correlational Method

A research method used to establish the degree of relationship (correlation) between two characteristics, events, or behaviors.