The Income Effect of a Price Change Is Named the Way

question 101

True/False

The income effect of a price change is named the way it is because it refers to a change in money income.

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Definitions:

Progressive Tax

A tax that takes a larger share of the income of high-income taxpayers than of low-income taxpayers.

Benefits Principle

The principle of tax fairness by which those who benefit from public spending should bear the burden of the tax that pays for that spending.

Federal Tax

Taxes levied by the national government on income, sales, property, and other activities.

Benefits Principle

A taxation principle that charges individuals based on the benefits they receive from public services.