Each of the Numbered Items Below Is Accorded Only One

question 37

Multiple Choice

Each of the numbered items below is accorded only one of the following lettered treatments. Use the existing law as it applies to the current year, match the best answer to the statements below.
-Julia receives $6.3 million in compensatory damages for a personal physical injury.

• A)Fully excluded from gross income.
• B)Fully included in gross income.
• C)Partially excluded from gross income.

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Definitions:

Open-market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates in the economy.

Friedman Rule

A monetary policy rule proposed by economist Milton Friedman, suggesting that the optimal nominal interest rate is zero to eliminate the opportunity cost of holding money.

Deflation

A decrease in the general price level of goods and services, often indicating an economic slowdown.

Inflation

The velocity at which the aggregate price level for goods and services elevates, thereby reducing purchasing capability.