Country a Specializes in the Production of Automobiles,and 45 Percent

question 64

Multiple Choice

Country A specializes in the production of automobiles,and 45 percent of its population works in the automobile manufacturing industry.A sharp increase in the world prices of automobiles led to a boom in the automobile manufacturing industry in Country A.However,the automobile manufacturers overestimated the demand for automobiles.This led to overproduction,which resulted in a large stock of unsold cars.Which of the following is likely to happen in the near future?

• A) The unemployment rate in Country A will increase.
• B) Household consumption in Country A will increase.
• C) Investment in Country A will increase.
• D) The supply of credit in Country A will increase.

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Definitions:

Comprehensive Income

A measure of all changes in equity of an enterprise during a period, except those resulting from investments by and distributions to owners.

Depreciation

An accounting method of allocating the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.

CCA Rate

The rate at which a business can claim Capital Cost Allowance, which is depreciation for tax purposes.

Marginal Tax Rates

This is the percentage of tax applied to your next dollar of income, varying with taxpayers' income levels within defined tax brackets.