Establishing the "Rules of the Game" Means That the Government

question 36

Multiple Choice

Establishing the "rules of the game" means that the government

• A) uses its authority to redistribute income from the rich to the poor.
• B) becomes the owner of all of the nonhuman resources in the economy.
• C) should be the primary sponsor of athletic contests in the country.
• D) establishes market prices by law.
• E) provides an appropriate institutional framework to enable the price system to function properly.

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Definitions:

Carryforward

A tax policy that allows individuals or companies to apply current year’s unused deductions or credits to future tax years.

Corporation

A legal entity that is separate from its owners, having its own rights and obligations, and is able to own assets, incur liabilities, and sell securities.

Tax Rates Change

Adjustments made by the government to the percentage at which income, corporate profits, or other bases are taxed, which may affect individuals, corporations, and valuation of investments.

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.