-Refer to Exhibit 11-5 Which Summarizes the Situation Prior to the Value

question 60

Multiple Choice

-Refer to Exhibit 11-5 which summarizes the situation prior to the value added tax (VAT) .If the government imposes a VAT rate of 10 percent,the government will receive ___________ in VAT revenue per loaf of bread sold and the final consumer will find that he has to pay _______________ more for a loaf of bread than he did prior to the VAT tax.

• A) $0.25; $2.53
• B) $0.11; $2.75
• C) $0.25; $0.25
• D) $0.03; $2.75

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Definitions:

Bulletin Board

A surface intended for the posting of public messages, notices, or advertisements.

Moral Hazard

The situation where one party to an agreement can take risks because they know they will not have to bear the full consequences of their actions.

Deductibles

Deductibles are the amounts that insured individuals must pay out of pocket for covered services before their insurance begins to pay.

Premiums

Payments made for insurance coverage or additional costs above the standard price.