If Tax Reduction and Simplification Are Effective, Then

question 56

Multiple Choice

If tax reduction and simplification are effective, then:

• A)real wages will increase as labour supply and labour demand increase.
• B)saving and investment in new capital will increase.
• C)interest rates will increase in financial markets and the demand for financial assets will fall.
• D)fewer new firms will be established, since existing firms will make more profit.

---

Definitions:

Depreciation

The systematic allocation of the depreciated cost of an asset over its useful life.

Real Estate Taxes

Taxes levied on property by the local government, based on the assessed value of the property.

Cleaning Service

A company or service provided by workers who perform cleaning tasks for residential or commercial spaces.

Variable Cost Percentage

The ratio of variable costs to sales, used to assess how costs change in relation to changes in a business's sales volume.