Which of the Following Statements Is CORRECT

question 75

Multiple Choice

Which of the following statements is CORRECT?

• A) The maximum federal tax rate on personal income in 2010 was 50%.
• B) Since companies can deduct dividends paid but not interest paid, our tax system favors the use of equity financing over debt financing, and this causes companies' debt ratios to be lower than they would be if interest and dividends were both deductible.
• C) Interest paid to an individual is counted as income for tax purposes and taxed at the individual's regular tax rate, which in 2010 could go up to 35%, but dividends received were taxed at a maximum rate of 15%.
• D) The maximum federal tax rate on corporate income in 2010 was 50%.
• E) Corporations obtain capital for use in their operations by borrowing and by raising equity capital, either by selling new common stock or by retaining earnings. The cost of debt capital is the interest paid on the debt, and the cost of the equity is the dividends paid on the stock. Both of these costs are deductible from income when calculating income for tax purposes.

Know the historical development of the American economy, including the transition from agriculture to industry.

Understand how industrialization and service-oriented economies have shaped modern economic systems.

Understand the characteristics of the American economic system and identify it as modified capitalism.

Comprehend the relationship between ethical conduct, corporate social responsibility, and business profitability.

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Definitions:

Internal Locus

The belief that one's actions are guided by personal decisions and efforts rather than external forces.

Locus of Control

A psychological concept that refers to how strongly people believe they have control over the situations and experiences that affect their lives.

Problem-Focused Coping

Problem-focused coping involves directly addressing a problem causing stress in order to reduce or eliminate it.

General Adaptation Syndrome

A theoretical model describing the body's short-term and long-term reactions to stress, proposed by Hans Selye, comprising stages of alarm, resistance, and exhaustion.