The Efficiency Argument for Tax Smoothing Is That Tax-Induced Distortions

question 17

Multiple Choice

The efficiency argument for tax smoothing is that tax-induced distortions are smallest when taxes are

• A) levied on goods with highly elastic supply curves
• B) levied on goods with highly elastic demand curves
• C) not changed frequently
• D) raised during recessions and lowered during booms
• E) used to finance government consumption rather than infrastructure

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