If Taxes

question 14

Multiple Choice

If taxes

• A)decrease, then consumption decreases, and aggregate demand shifts rightward.
• B)decrease, then consumption increases, and aggregate demand shifts leftward.
• C)increase, then consumption decreases, and aggregate demand shifts leftward.
• D)increase, then consumption increases, and aggregate demand shifts rightward.

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Definitions:

Weighted Average Cost

A financial metric that calculates the average price of various sources of capital (debt, equity, etc.), weighted by their respective use in the financing mix of a company.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often calculated using models like the Capital Asset Pricing Model (CAPM).

After-tax Cost

The expense of an action or transaction after considering the impact of taxes.

Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.