An excise tax is also called a ______ tax.

• A. specific
• B. ad valorem
• C. regressive
• D. progressive

Answer: (A)

Verified step by step guidance

1. Understand the definition of an excise tax: it is a tax imposed on a specific good or service, usually per unit sold.
2. Recall that a 'specific tax' (also called a unit tax) is a fixed amount charged per unit of the good, regardless of its price.
3. Compare this with an 'ad valorem' tax, which is a percentage of the price of the good, not a fixed amount per unit.
4. Recognize that 'regressive' and 'progressive' describe how tax rates change with income, not the type of tax based on goods or services.
5. Conclude that since an excise tax is a fixed amount per unit, it is also called a 'specific' tax.