Question

In: Economics

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

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

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