1. One reason governments impose taxes is to: a. spur economic growth b. raise government revenues...

1. One reason governments impose taxes is to:

a. spur economic growth

b. raise government revenues

c. encourage more production

d. increase consumer spending

2. One cost associated with the imposition of taxes is:

a. shortages

b. overconsumption

c. scarcity

d. deadweight loss

3. The total amount of surplus lost due to taxation is:

a. less than the amount of revenue generated

b. greater than the amount of revenue generated

c. used to fund public services

d. transferred to the government in the form of tax revenues

Solutions

Expert Solution

1. Option b.

One reason government's impose taxes is to raise government revenues.
When the government is short of revenues for its expenditures, they imposes taxes on the transactions that occur within an economy.
These taxes serves as revenues for the government which allows them increase government spending.

2. Option d.

One cost associated with the imposition of taxes is deadweight loss.
Deadweight loss refers to the loss in the total surplus or the loss of consumer and producer surplus together within an economy.
It can arise when taxes are imposed as producer surplus and consumer surplus gets lost due to deadweight loss.

3. Option b.

The total amount of surplus lost due to taxation is greater than the amount of revenue generated.
When taxes are imposed, the government earns revenues from these taxes.
These revenues earned will exceed the total surplus lost due to the taxation.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

In order to raise revenues, the government has decided to levy taxes (T) on luxury goods...

In order to raise revenues, the government has decided to levy taxes (T) on luxury goods purchased by taxpayers with earnings higher than the average income. The demand and supply curves of yacht before taxes are follows: (20 points total) QS=0.5P QD=600-P A. Compute the existing equilibrium price (P*) and quantity (Q*). (2 points) B. i. State the new equation of demand curve. (2 points) ii. Compute new equilibrium quantity (Q’). (2 points) iii. Compute market price received suppliers (PS)....

What was the central message - referring to economic growth, government regulation, and government taxes all...

What was the central message - referring to economic growth, government regulation, and government taxes all have in common? Is this view correct? Is it widely understood by Americans? What part did you find most beneficial? What did you disagree with?

Revenues are vital for the expansion and growth of any organization. The reason is that they...

Revenues are vital for the expansion and growth of any organization. The reason is that they are an important component of the organization’s net income. Hence, they are central to financial analysis. According to US GAAP, a firm recognizes revenues when earned and when it has received an asset or satisfied a liability with a value the firm can precisely measure. In some instances, a firm can make an argument to recognize revenue before a product or service has been...

.Governments often claim that they impose high taxes on cigarettes because smoking is bad for your...

.Governments often claim that they impose high taxes on cigarettes because smoking is bad for your health. They claim that the high taxes are intended to discourage your consumption. Use your understanding of the elasticity of demand to dispute this claim, assuming that cigarettes have a very inelastic demand. Illustrate with a graph. Hint: Very inelastic is not the same as inelastic or perfectly inelastic.

1. Which of the two taxes is likely to raise more money for the government and...

1. Which of the two taxes is likely to raise more money for the government and why? A. The cigarette tax, because cigarettes are more expensive than most other tobacco products. B. The cigarette tax, because people get addicted to cigarettes and are willing to pay the tax. C. The tobacco tax, since people will keep buying tobacco anyway and you can reap the tax rewards. D. The tobacco tax, because it covers a much broader variety of products to...

Governments are fond of using sin taxes. The stated reason is that they discourage some stated...

Governments are fond of using sin taxes. The stated reason is that they discourage some stated bad behavior. A big appeal of them to policy-makers, however, is that they generate stable tax revenue. Identify a sin tax and discuss why it would generate stable tax revenue. Evaluate how that tax revenue might change over time and why. Finally, discuss who actually pays the sin tax.

1) Which of the following is NOT a reason governments interfere with comparative advantage? A) Governments...

1) Which of the following is NOT a reason governments interfere with comparative advantage? A) Governments attempt to achieve full employment. B) Governments promote economic development. C) national self-sufficiency in defense-related industries D) All are reasons governments interfere with comparative advantage. 2) Of the following, which would NOT be considered a way that government interferes with comparative advantage? A) tariffs B) managerial skills C) quotas D) other non-tariff restrictions 3) Which of the following is NOT always understood by MNE...

Assume the MPC is 0.6. If government were to impose $20 billion of new taxes on...

Assume the MPC is 0.6. If government were to impose $20 billion of new taxes on household income, consumption spending would initially decrease by A. $12 billion B. $20 billion C. $80 billion D. $8 billion

discuss the role of government policy in promoting or retarding economic growth in one of the...

discuss the role of government policy in promoting or retarding economic growth in one of the following “development states” of east or south-east Asia: South Korea, Indonesia, Malaysia

Legalization of marijuana can raise additional revenues by taxing marijuana to government In particular, the state...

Legalization of marijuana can raise additional revenues by taxing marijuana to government In particular, the state you are working for is considering a $5 tax on every 100 grams of marijuana but is unsure whether they should tax the buyers of marijuana or the suppliers. Advise the government on the type of tax they should impose; that is, should they tax the buyers or the sellers and what effect would it have on the market? It might be useful to...

Subjects