Multiple Choice
Assume that the lost output due to tax distortions is proportional to the square of the tax rate.If the government increased the tax rate from 25% to 40%,the lost output would increase by a factor of
A) 1.56.
B) 1.60.
C) 1.96.
D) 2.56.
Correct Answer:
Verified
Correct Answer:
Verified
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