Which of the following statements best captures the textbook's conclusions about using fiscal policy to promote equity in developing countries?
A) Equity is not a proper goal for fiscal policy.
B) Economic and administrative realities limit the scope for achieving income redistribution through the tax system.
C) Highly progressive taxes can and should be used to promote equity and efficiency simultaneously.
D) Tax policy is far more effective than expenditure policy as an instrument for income redistribution.

Question

Quizplus · Accepted Answer

The textbook's conclusions suggest that while equity is an important goal, economic and administrative realities limit the ability of fiscal policy to achieve significant income redistribution. Therefore, option B is the most accurate statement. The textbook does not suggest that equity is not a proper goal or that tax policy is more effective than expenditure policy for income redistribution. While highly progressive taxes can promote efficiency and equity simultaneously, this is not presented as the only or best option for promoting equity in developing countries.

Which of the Following Statements Best Captures the Textbook's Conclusions