An efficient tax ?
Correct answer: B. does all the things describe in these answers
- A. minimizes the administrative burden form the tax
- B. does all the things describe in these answers
- C. raises revenue at the smallest possible cost to taxpayers.
- D. minimize the deadweight loss from the tax.
Explanation
An efficient tax raises revenue while imposing the least total cost, including taxpayers' compliance and administrative costs and the deadweight loss from distorted decisions. Therefore, the option combining all these aims is best.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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