When Taxes on the Return to Capital in a Given

question 89

Multiple Choice

When taxes on the return to capital in a given economy are reduced,it causes firms to employ __________ capital goods.In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis) ,this then causes ____________________ which makes the LRAS curve shift ____________ resulting in ______________________.

• A) less; the production function to shift downward; leftward; a shrinking economy
• B) more; the production function to shift upward; rightward; economic growth
• C) more; a movement up along a given production function; rightward; economic growth
• D) more; a movement down along a given production function; leftward; a shrinking economy

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Definitions:

Equivalent Units

Measures used in manufacturing to express the amount of work completed in terms of fully finished units during a given period.

First-in

This typically refers to the inventory valuation method "First-In, First-Out" (FIFO), which assumes the first items produced or purchased are the first ones sold.

Conversion Costs

Costs incurred during the transformation of raw materials into finished goods, typically including labor and overhead.

Completed Unit

A unit of product that has undergone all stages of production and is ready for sale or distribution.