Refer to Application 1, "Using Value Added to Measure the True

question 50

Multiple Choice

Refer to Application 1, "Using Value Added to Measure the True Size of Wal- Mart," to answer the following questions:
-If we try to estimate what Wal- Mart produces, we must measure its "value added," which is defined as the:

• A) value of sales + cost of sales.
• B) value of sales - cost of sales.
• C) value of total sales.
• D) cost of sales.

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Definitions:

Supply-side Economics

An economic theory that argues economic growth can be most effectively fostered by lowering taxes and decreasing regulation to increase production.

Tax Cuts

Reductions in the amount of taxes imposed by a government, often aimed at stimulating economic growth by increasing disposable income or encouraging investment.

Labor Supplied

The overall time period that workers consent to and can offer to work, in exchange for an established rate of pay.

Laffer Curve

A theoretical representation of the relationship between government revenue raised by taxation and all possible rates of taxation, suggesting that higher tax rates beyond a certain point actually decrease total revenue.