Firms That Face a _____Tax Rate Structure Have an Incentive

question 3

Multiple Choice

Firms that face a _____tax rate structure have an incentive to hedge, because it can reduce the firm's expected tax liability.

• A)flat
• B)regressive (or concave)
• C)decelerating
• D)progressive (or convex)

Recognize and calculate the impact of cash and non-cash investing and financing transactions.

Interpret the statement of cash flows to assess organizational financial health.

Apply knowledge of cash flow statement preparation to real-world financial data analysis.

Understand the impact of different types of transactions on company’s cash position.

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Definitions:

Lowering Tax Rates

The act of reducing the percentage at which income or corporate profits are taxed, which can affect economic behaviors and government revenues.

Supply-siders

Economists who believe reducing barriers for people to produce (supply) goods and services, like lower taxes, will stimulate economic growth.

Curing Recessions

Efforts and policies aimed at stimulating economic recovery and ending periods of economic decline.

Keynesian Economics

As formulated by John Maynard Keynes, this school believed the private economy was inherently unstable and that government intervention was necessary to prevent recessions from becoming depressions.