If an Australian Company Sells Insurance to a Foreign Company

question 136

Multiple Choice

If an Australian company sells insurance to a foreign company, how does this affect Australia's balance of payments?

• A)It increases exports of services.
• B)It increases capital inflows.
• C)It increases imports of goods.
• D)It lowers the balance on the current account.

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Definitions:

Tax Payment

The process of paying taxes to governmental authorities, which is obligatory for individuals and businesses.

Tax Rate Structure

The way in which tax rates progress based on variables such as income level, with different rates applied to different levels or brackets of income.

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, indicating the percentage of tax applied to their highest bracket of income.

Average Tax Rate

The proportion of total income paid in taxes, calculated by dividing the total tax amount by the taxable income.