Why Was British Economic Recovery Slower Than That of France

question 9

Multiple Choice

Why was British economic recovery slower than that of France or West Germany?

• A)The cost of maintaining the British Empire weighed on the domestic economy.
• B)British welfare costs were higher than those of France.
• C)British citizens paid proportionally higher taxes than French or German citizens.
• D)The United Kingdom had a large trade surplus with the United States,which kept the value of the pound too high.
• E)The United Kingdom spent 25 percent of its national budget on the military.

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Definitions:

After-Tax Cost of Debt

The interest expense on debt adjusted for taxes, showing the actual cost of debt financing after considering the tax shield.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Component Cost of Debt

The effective rate that a company pays on its current debt, incorporating tax effects.

Preferred Shares

Preferred Shares are a type of stock that grant holders preferential treatment over common stockholders in terms of dividends and assets during liquidation, but usually do not carry voting rights.