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_____ tax does NOT distort incentives and is best at promoting economic efficiency.
A) A lump-sum
B) FICA
C) A property
D) An income
Lump-sum Tax
A fixed tax amount not dependent on the taxpayer's income level or financial transactions.
Economic Efficiency
A state where every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.
Incentives
Incentives are rewards or penalties that motivate individuals or entities to act in a certain way, often used to influence economic behavior and decision-making.
- Analyze the impact of taxation on government revenue and economic behavior.
- Familiarize oneself with the bureaucratic costs and economic inefficiencies resulting from taxing activities.
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Learning Objectives
- Analyze the impact of taxation on government revenue and economic behavior.
- Familiarize oneself with the bureaucratic costs and economic inefficiencies resulting from taxing activities.
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