Sandi Sells 100 Shares of Gray Corporation Stock on December

question 18

Multiple Choice

Sandi sells 100 shares of Gray Corporation stock on December 4, 2014. She inherited the stock from Christine, who died on January 30, 2014. The executor of the estate used the primary valuation date. Sandi's holding period for the stock is

• A) Long-term.
• B) Short-term.
• C) Long-term if sold at a gain; short-term if sold at a loss.
• D) Short-term if sold at a gain; long-term if sold at a loss.

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Definitions:

MPC

Marginal propensity to consume (MPC) represents the ratio of the change in consumer spending to the change in income, showing how much income will be spent rather than saved.

APS

Average Propensity to Save; the fraction of total income that is saved by the economy or an individual at a certain time.

APC

Average Propensity to Consume, a statistical measure reflecting the percentage of income that is spent on goods and services as opposed to being saved.

Disposable Income

The amount of money a household has available for spending and saving after income taxes have been accounted for.