Question
Which of the following statements is correct? Explain your answer! a) According to the standard model of tax evasion, an increase in the fine rate
Which of the following statements is correct? Explain your answer!
a) According to the standard model of tax evasion, an increase in the fine rate "F" unambiguously leads to an increase in declared income "X". (2 points)
b) According to the standard model of tax evasion, if the ``Coefficient of Absolute Risk Aversion`` is decreasing, an increase in the taxpayer's pretax income "Y" increases tax evasion. (2 points)
c) According to the standard model of tax evasion, if the ``Coefficient of Absolute Risk Aversion`` is decreasing, an increase in the tax rate "t" leads to an increase in declared income "X". (2 points)
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