Question

which of the following statements explains the classical view on taxation?​

Answer 1

Explanation:

One of the view about MSB and taxation is;

MSB decline with every additional unit of money spent by the government due to imposition of taxes

MSB stands for Marginal Social Sacrifice. It gives an estimate of the amount of social sacrifice taken by public because of the imposition of an additional unit of tax. Whenever taxes are increased, the amount of money available to the public gets a hit and hence MSB declines further