Holding All Else Constant,an Increase in Consumption Taxes,such as Sales

question 69

Multiple Choice

Holding all else constant,an increase in consumption taxes,such as sales taxes or a VAT,will ________ the price of consumption goods and ________ output.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

---

Definitions:

Consolidation Elimination

The process of removing internal transactions and balances between entities within a single group to prepare consolidated financial statements.

Equity Method

An accounting technique used to record investments in affiliate companies where the investor has significant influence but not full control, typically between 20% and 50% ownership.

Subsidiary's Income

The earnings generated by a company that is more than 50% owned by another company, referred to as the parent company.

Straight Line Amortization

A method of writing off the cost of an intangible asset evenly over its useful life.