In a Model with Income Taxes, Assume That Autonomous Investment

question 34

Multiple Choice

In a model with income taxes, assume that autonomous investment decreases.Which of the following will be TRUE?

• A)the full-employment budget surplus will decrease
• B)the actual budget surplus will decrease
• C)the cyclical component of the budget surplus will decrease
• D)the actual budget surplus will not be affected
• E)both B and C

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Definitions:

Buildings (Net)

The value of a company's buildings after accounting for depreciation and impairment, reflecting the current value of these assets on the balance sheet.

Fair Value

The sum to be gained from an asset liquidation or the amount to settle a liability in a conscientious market exchange on the designated day for appraisal.

Fully Amortized

A term that describes a loan or mortgage for which all the principal and interest payments have been completed over the term, leaving no balance.

Book Values

The value of an asset as recorded on a company's balance sheet, calculated as cost minus accumulated depreciation.