The most cost-efficient tax breaks have large ________ impacts and small ________ impacts.

Question

Quizplus · Accepted Answer

Cost-efficient tax breaks should have small marginal impacts because these impacts occur at the margin and may not have a substantial effect on economic decisions. However, they should have large inframarginal impacts, as these impacts affect a wide range of economic decisions and can lead to significant changes in behavior. Therefore, the most cost-efficient tax breaks have large inframarginal impacts and small marginal impacts.

The Most Cost-Efficient Tax Breaks Have Large ________ Impacts and Small