Yi and Avik Are Both Economists

question 2

Multiple Choice

Yi and Avik are both economists.Yi thinks that taxing consumption,rather than income,would result in higher household saving because income that is saved would not be taxed.Avik does not think that household saving would respond much to a change in the tax laws.In this example,Yi and Avik

• A)hold different normative views about the tax system.
• B)disagree about the validity of a positive theory.
• C)have a fundamental misunderstanding of the tax system.
• D)More than one of the above is correct.

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Definitions:

Recognizing

The act of acknowledging or identifying something based on certain characteristics or criteria.