Asked by Gurlivleen Singh on May 14, 2024
Verified
Determining who actually pays the cost imposed by a tax is the study of:
A) public interest theory.
B) rational choice theory.
C) tax incidence.
D) budget analysis.
Tax Incidence
The analysis of the effect of a particular tax on the distribution of economic welfare among entities in the economy.
Rational Choice Theory
An economic theory that assumes individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.
Public Interest
The well-being of the general public, often considered within the context of government policy-making.
- Master the theory of tax incidence and its impact on economic dynamics.
Verified Answer
LT
Lauren TurnerMay 20, 2024
Final Answer :
C
Explanation :
Tax incidence is the study of who ultimately bears the burden of a tax, whether it be on consumers, producers, or both. Public interest theory and rational choice theory are not related to the study of tax incidence, and budget analysis focuses on the allocation of government spending rather than the impact of taxes.
Learning Objectives
- Master the theory of tax incidence and its impact on economic dynamics.