(Consider This) Which of the Following Claims Is Not Made

question 192

Multiple Choice

(Consider This) Which of the following claims is not made by opponents of a value-added tax (VAT) ?

• A) Savings and investment is discouraged because future consumption is penalized.
• B) The VAT is regressive, potentially leading to additional progressive taxes to offset the regressive VAT.
• C) Sellers bear a disproportionately large burden of the tax.
• D) The VAT is a hidden tax, and thus easier to raise to support the expansion of government.

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Definitions:

Effective Rate

The actual interest rate on an investment or loan, taking into account the compounding of interest at specified intervals over time.

Compounded Continuously

A method of calculating interest where the amount earned is constantly reinvested, leading to exponential growth over time.

Effective Annual Rate

The effective annual rate is the real return on an investment, taking into account the effect of compounding interest over a year.

Annual Rate

The interest rate charged per year on a loan, or earned on an investment, not accounting for the effect of compounding within that year.