Which of the Following Statements Is True

question 14

Multiple Choice

Which of the following statements is true?

• A) Because coupon payments on tax-exempt bonds are exempt from federal income tax, the expected after-tax return on them will be higher for individuals in higher income tax brackets.
• B) An decrease in tax rates will increase the demand for U.S Treasury bonds, lowering their interest rates.
• C) Interest rates on tax-exempt bonds will be higher than comparable bonds without the tax exemption.
• D) An decrease in tax rates will increase the supply of U.S Treasury bonds, lowering their interest rates.

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Definitions:

Real Wages

Pay from employment, recalibrated for price level changes to indicate the true value of work income.

Fringe Benefits

Additional compensation given to employees beyond their base wage or salary, such as health insurance, paid vacation, or retirement plans.

Take-Home Pay

Net income after all deductions like taxes, social security, and retirement contributions are subtracted from an individual's gross salary.