In Order to Determine Tax Incidence, One Must

question 121

Multiple Choice

In order to determine tax incidence, one must

• A)consider issues of equity.
• B)also determine the legal liability of the tax.
• C)evaluate where the tax burden eventually falls.
• D)use the "flypaper theory" of taxation.

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Definitions:

Decentralization

The process of distributing or dispersing functions, powers, people or things away from a central location or authority.

Trade Barriers

Government-imposed restrictions on international trade, such as tariffs and quotas, that affect the free flow of goods between countries.

Inefficient Industry

A sector of the economy where resources are not optimally used, often leading to wasted efforts, higher production costs, and reduced competitiveness.

Cross-Border Flow

The movement of goods, services, capital, and people across national boundaries.