-The Relationship in the Above Figure Suggests That When the Interest

question 95

Multiple Choice

-The relationship in the above figure suggests that when the interest rate is 5 percent,

• A) a decrease in income will be associated with an increase in expenditures.
• B) an increase in income will be associated with a decrease in expenditures.
• C) a decrease in income will be associated with a decrease in expenditures.
• D) there is no relationship between expenditures and income.

---

Definitions:

Loss Carry-Forward

Using a year’s capital losses to offset capital gains of future years.

Lease Payments

Periodic payments from a lessee to a lessor in exchange for the use of an asset for a set duration.

Tax Benefit

A deduction, credit, or exemption that reduces taxable income or tax liability, provided to incentivize certain activities or investments.

Operating Lease

A lease agreement for the use of an asset without ownership, typically with shorter terms than a finance lease.