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The Efficiency Argument for Tax Smoothing Is That Tax-Induced Distortions

Question 23

Multiple Choice

The efficiency argument for tax smoothing is that tax-induced distortions are smallest when taxes are


A) levied on goods with highly elastic supply curves
B) levied on goods with highly elastic demand curves
C) not changed frequently
D) raised during recessions and lowered during booms
E) used to finance government consumption rather than infrastructure

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