Refer to Scenario 1

question 64

Multiple Choice

Refer to Scenario 1.2 below to answer the question(s) that follow.
SCENARIO 1.2: A scientist wants to understand the relationship between automobile emissions and the level of global warming. The scientist collects data on the volume of automobile emissions and the levels of global warming over time. The scientist concludes that a 1% increase in automobile emissions causes a 0.0003% increase in average global temperatures. From this information he concludes that the automobile emissions are harmful to the environment and should be reduced to stop the increase in global temperatures.
-Refer to Scenario 1.2. The statement that a 1% increase in the automobile emissions causes a 0.0003% increase in average global temperatures is an example of

• A) positive economics.
• B) marginal economics.
• C) normative economics.
• D) the fallacy of logic.

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Definitions:

Municipal Obligations

Debt securities issued by municipalities to fund public projects, which may offer tax-exempt interest income to investors.

Operating Loss Carryback

A tax provision that allows a company to apply a current year's net operating losses to past profit years to obtain a tax refund.

Operating Loss Carryforward

Future reductions in taxable income allowed due to losses incurred in previous periods.

Temporary Differences

Differences between the book basis and tax basis of an asset or liability that result in taxable or deductible amounts in future years.