As Exemptions Are Raised and Allowable Deductions Are Increased,there Is

question 50

Multiple Choice

As exemptions are raised and allowable deductions are increased,there is

• A)A smaller gap between effective and nominal tax rates.
• B)Greater vertical inequity.
• C)A smaller gap between gross income and taxable income.
• D)Greater horizontal equity.

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Definitions:

Opportunity Costs

The penalty of not opting for the next superior alternative while making a decision.

Total Revenues

The total amount of income generated by the sale of goods or services related to the company's primary operations.

Economic Profits

The surplus or profit earned by a firm over and above the total costs of production, including both explicit and implicit costs, signifying an above-normal return.

Accounting Profits

The financial gain calculated by subtracting total explicit costs from total revenue, using generally accepted accounting principles (GAAP).