Which of the following examples would demonstrate the importance of indirect effects of taxation?
A)a sales tax on expensive fur coats
B)a sales tax that excludes purchase made over the Internet
C)a tax that universities place on textbooks purchased through the university-owned bookstore
D)all of the above

Question

Quizplus · Accepted Answer

A) The sales tax on expensive fur coats may not directly affect most people, but it indirectly affects the entire economy because it shifts consumption away from fur coats and towards other goods and services.
B) The exclusion of Internet purchases from a sales tax may seem insignificant at first, but it can have indirect effects on brick-and-mortar retailers who are competing with online retailers.
C) The tax that universities place on textbooks purchased through the university-owned bookstore may only directly affect students at that university, but it indirectly affects the entire textbook market by giving an advantage to the university-owned bookstore over other textbook retailers.

Which of the Following Examples Would Demonstrate the Importance of Indirect