(Consider This) Which of the following claims is not made by opponents of a value-added tax (VAT)?
A. Savings and investment is discouraged because future consumption is penalized.
B. The VAT is regressive, potentially leading to additional progressive taxes to offset the
regressive VAT.
C. Sellers bear a disproportionately large burden of the tax.
D. The VAT is a hidden tax, and thus easier to raise to support the expansion of government.
Answer: C
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Which of the following is a prominent solution to adverse selection in used-car markets?
A) An imposition of a tax on the sale of each unit in the used-car market B) The imposition of a price ceiling in the used-car market C) The imposition of a price floor in the used-car market D) Third-party certification of used cars