Suppose the Annual Inflation Rate Is 5%, and an Asset

question 38

Multiple Choice

Suppose the annual inflation rate is 5%, and an asset bought at the beginning of the year for $50,000 is sold for $65,000. If the capital- gains tax rate is 30%, what is the (approximate) effective tax rate on the sale of this asset?

• A) 7%.
• B) 10%.
• C) 9%.
• D) 6%.
• E) 8%.

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Definitions:

Approach Behaviours

Actions directed towards obtaining positive outcomes or experiences.

Perceived Resources

The resources a person believes they have available to them, which can include physical, emotional, financial, or social assets.

Illusory Correlation

The perception of a relationship between two variables even when no such relationship exists.