If a Poor Family Has Three Children in Public School

question 86

Multiple Choice

If a poor family has three children in public school and a rich family has two children in private school, the ability-to-pay principle would suggest that

• A)the poor family should pay more in taxes to pay for public education than the rich family.
• B)the rich family should pay more in taxes to pay for public education than the poor family.
• C)the benefits of private school exceed those of public school.
• D)public schools should be financed by property taxes.

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Definitions:

Financial Engineering

Creation of new securities or financial processes.

Long-Term Financial Risk

The possibility of experiencing financial losses or failures that arise over an extended period, often due to changes in market conditions, interest rates, or other economic factors.

Short-Term Financial Risk

The risk associated with the need to meet financial obligations in the near term, often within one year.

Canadian Short-Term Interest Rates

The interest rates applied to short-term financial instruments in Canada, typically with maturities of less than one year.