1. Average tax rate is

a. total taxes paid divided by total income

b. measures the sacrifice a taxpayer makes

c. measures the incentive effects of taxes on work effort, saving, etc.

d. Both a and b.

e. All of the above.

2. If Social Security were considered part of the general budget then,

a. The vertical equity principle would be violated

b. Marginal tax rates would be regressive.

c. The horizontal equity principle would be violated.

d. Both a and b.

e. Both b and c.

3. Critics of food stamps argue that low income should be given cash payments rather than food vouchers. What are their arguments?

a. They would rather spend it on drugs.

b. The outcome is the same whether or not you give them food stamps or cash.

c. Low income knows better what they need.

d. Both a and b.

e. Both b and c.