A Decrease in the Effective Tax Rate on Capital Would

question 74

Multiple Choice

A decrease in the effective tax rate on capital would cause the IS curve to

• A)shift up and to the right.
• B)shift down and to the left.
• C)remain unchanged.
• D)remain unchanged if taxes are fully deductible from income; otherwise, shift up and to the right.

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Definitions:

Customer Account Balances

The amounts owed to a company by its customers for goods or services delivered on credit.

Adjusting Entries

Entries made in the accounting records to realign the balances of accounts before financial statements are prepared.

Accrued Expense

An expense that has been incurred but not yet paid, recognized on the financial statements.

Long-Lived Asset

An asset expected to provide economic benefits over a period longer than one year, such as buildings or machinery.