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The Tax Revenue Elasticity with Respect to GDP

Question 18

Multiple Choice

The tax revenue elasticity with respect to GDP


A) exceeds 1 in part because things that are not taxed, like depreciation, do not vary with GDP.
B) exceeds 1 in part because things that are taxed are taxed progressively and vary with GDP.
C) exceeds 1 in part because exports are included in the computation of GDP and move countercyclically with GDP.
D) all of the above.
E) a and b only.

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