Question

1.

The equivalent variation of a tax measures:

Select one:

The amount by which a different tax would need to be increased to generate the same amount of government revenues as the tax being considered

The loss inflicted by the tax in terms of the amount by which utility has decreased

The loss inflicted by the tax in terms of the amount that income would have to be reduced to cause the same decrease in utility as the tax

The loss inflicted by the tax above and beyond the tax revenues collected

2.

Optimal taxation depends on the trade-off between efficiency and fairness. In evaluating efficiency, which of the following do we NOT need to consider? (SELECT ALL THAT APPLY)

Select one or more:

Administration costs

Compliance costs

Tax evasion

The ability to pay principle

Excess burden

3.

The GST is considered an example of: (SELECT ALL THAT APPLY)

Select one or more:

A broad-based tax

An excise tax

A selective sales tax

An ad valorem tax

A value-added tax

4. Which of the following major industrialized nations has a value added tax? (SELECT ALL THAT APPLY)

Select one or more:

France

United States

United Kingdom

China

Answer 1

Answer 1 - correct option is A

Reason - equivalent variation of tax measure the amount by which different tax would need to be increase to generate the same amount of government revenue as the tax being considered

Answer 2 - correct option is A ,B and C

Reason - administration cost , tax evasion and compliance cost are not considered

Answer 3 - correct Option is A , B ,D

Reason - Gst is an example lf broad based tax , excise tax and ad volarem tax

Answer 4 - correct Option is A and C

Reason - France and United Kingdom has major industrilised nation that has value added tax