Question : What is the meaning of incidence of tax:
Option 1: Level and rate of taxation
Option 2: Who ultimately bears the money burden of the tax
Option 3: Growth in taxation
Option 4: Way in which a tax is collected
Correct Answer:
Who ultimately bears the money burden of the tax
Solution : The correct answer is (b) Who ultimately bears the money burden of the tax.
The incidence of tax refers to the analysis of who ultimately bears the economic burden or impact of a tax. It examines how the tax burden is distributed among different individuals or groups in an economy. In other words, it focuses on identifying who ends up paying the tax, even if it may be initially imposed on a different party.
When studying the incidence of tax, economists analyze how the tax burden is shared between consumers, producers, and other stakeholders. They assess how the tax affects prices, wages, profits, and overall economic behavior. The incidence of tax can vary depending on factors such as the elasticity of demand and supply, market conditions, and the ability of individuals or entities to shift the burden of the tax onto others.
Related Questions
Trending Articles/News
