Which of the Following Best Explains Why Governments May Prefer

question 153

Multiple Choice

Which of the following best explains why governments may prefer an inflation tax to some other kind of tax?

• A)The inflation tax is easier to impose.
• B)The inflation tax reduces inflation.
• C)The inflation tax falls mainly on high-income individuals.
• D)The inflation tax reduces the real cost of government expenditure.

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Definitions:

Labor Efficiency Variance

The difference between the actual hours worked and the expected hours worked, valued at the standard labor rate.

Labor Rate Variance

The variance between the real labor cost and the anticipated (or norm) cost, calculated based on the working hours.

Materials Quantity Variance

A calculation of the difference between actual material usage and expected usage in production, multiplied by the standard cost for each unit.

Materials Price Variance

The difference between the actual cost of materials and the expected cost based on standard prices.