When Will a Change in the Tax Laws That Increases

question 5

Multiple Choice

When will a change in the tax laws that increases the supply of loanable funds have a bigger effect on investment?

• A) when the demand for loanable funds is more elastic and the supply of loanable funds is more inelastic
• B) when the demand for loanable funds is more inelastic and the supply of loanable funds is more elastic
• C) when both the demand for and supply of loanable funds are more elastic
• D) when both the demand for and supply of loanable funds are more inelastic

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Definitions:

Target Selling Price

The price at which a company aims to sell its product, usually based on market research and cost-plus profit considerations.

Outsourcing Production

The business practice of having goods or services produced by external organizations, typically to reduce costs.

Absorption Costing

An accounting methodology that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Required Rate of Return

The minimum expected return on an investment necessary for it to be considered a worthwhile endeavor.