What must we do to fully understand how taxes affect economic well-being
A)assume that economic well-being is not affected if all tax revenue is spent on goods and services for the Canadian public
B)know the dollar amount of all taxes raised in the country each year
C)compare the reduced welfare of buyers and sellers to the amount of government revenue raised
D)compare the expenditures of the federal government to its tax revenue

Question

Quizplus · Accepted Answer

To fully understand how taxes affect economic well-being, we need to compare the reduced welfare of buyers and sellers to the amount of government revenue raised. This involves looking at how taxes affect the allocation of resources in the economy, and assessing the trade-offs between government revenue and economic efficiency. Simply assuming that economic well-being is not affected if all tax revenue is spent on goods and services for the Canadian public (choice A) is not accurate, as taxes can still affect incentives and distort market outcomes. Knowing the dollar amount of all taxes raised in the country each year (choice B) or comparing the expenditures of the federal government to its tax revenue (choice D) are also insufficient to fully understand how taxes affect economic well-being, as they do not account for the efficiency costs and distributional effects of taxation.

What Must We Do to Fully Understand How Taxes Affect