Suppose There Is a Linear Relationship Between National Income and Total

question 91

Multiple Choice

Suppose there is a linear relationship between national income and total tax revenue.If national income is $100 million,then $25 million is collected as tax revenue .If national income is $200 million,then $40 million is collected in tax revenue.What is the marginal response in tax revenue to a change in national income?

• A)15 million
• B)0.15 million
• C)15
• D)0.15
• E)-15

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Definitions:

Financing Activities

Transactions that involve raising capital or repaying funds, including issuing shares, borrowing, or repaying debt.

Financial Statement Users

Individuals or groups, such as investors, creditors, and regulatory agencies, who analyze financial statements to make informed decisions.

Cash Flows

The entirety of monetary transactions coming into and going out of a corporation, crucially affecting its immediate financial resources.

Indirect Method

An approach to preparing the cash flow statement where the net income is adjusted for non-cash transactions and changes in working capital to estimate cash flows from operating activities.