Which of the Following Is True of an Excise Tax

question 92

Multiple Choice

Which of the following is true of an excise tax?

• A)It has an income and a substitution effect.
• B)It only has an income effect.
• C)It only has a substitution effect.
• D)The income and substitution effects work in opposite directions in case of an excise tax.

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Definitions:

Advancing Warm Air Mass

A body of warm air that moves into an area previously occupied by cooler air.

Grazing Mammals

Grazing Mammals are a group of mammals that primarily feed on grasses and other ground-level vegetation, playing a key role in ecosystems by shaping vegetation structure.

Occasional Fires

Fires that happen sporadically in ecosystems, which can play a natural role in shaping vegetation patterns, nutrient cycling, and habitat structure.

Grasslands

Vast open areas dominated by grasses, used for grazing, and can be found in various climates around the world.