ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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government revenue
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higher prices
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falling quantity demanded
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lower prices
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Detailed explanation-1: -Detailed Solution. The correct answer is MAT.
Detailed explanation-2: -The impact of taxation, specifically the term impact, is used to define the point of the initial burden of the tax*. It is common knowledge that tax* is divided among parties to spread the burden of the amount. So, the party on whom the tax* is originally imposed is signified by tax impact.
Detailed explanation-3: -(b) Effect on Price Stability: The objective of taxation during inflation should be to reduce excess purchasing power in the hands of the people. This can be done by rising existing tax rate and imposition of new taxes during inflation. In this way, it will help to bring price stability.
Detailed explanation-4: -The correct answer is Interest tax.