The Ability-To-Pay Principle Is Most Closely Tied to the Concept

question 106

Multiple Choice

The ability-to-pay principle is most closely tied to the concept of

• A)horizontal equity in taxation.
• B)fiscal federalism.
• C)vertical equity in taxation.
• D)the benefits principle of tax equity.

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Definitions:

Keynesians

Economists and followers of the economic theories proposed by John Maynard Keynes, emphasizing the importance of total spending in the economy and government interventions to stabilize economic cycles.

Laissez-Faire Policies

Economic stance that opposes the overregulation or interference of the government in free market operations.

Monetary Restraint

A policy used by central banks to slow down economic growth by raising interest rates or reducing the supply of money.

Aggregate Demand

The entire need for products and services within an economy at a specific aggregate price level during a certain time frame.